First-Price Auction Implements Efficient Investments

7 Pages Posted: 29 Jul 2019

See all articles by Kentaro Tomoeda

Kentaro Tomoeda

University of Technology Sydney (UTS) - Department of Economics

Date Written: August 15, 2017

Abstract

This note shows that the first-price auction fully implements efficient investments when agents make not only ex ante but also ex post investments. The essential assumptions of our model are that (i) each agent can invest before and after participating in the auction under the same cost function and (ii) the cost functions are common knowledge among agents. In any equilibrium of our model, the most efficient agent always wins and makes the efficient level of investment.

Keywords: first-price auction, investment efficiency, full implementation

JEL Classification: D82, D44, D47

Suggested Citation

Tomoeda, Kentaro, First-Price Auction Implements Efficient Investments (August 15, 2017). Economics Letters, Vol. 159, 2017, Available at SSRN: https://ssrn.com/abstract=3425970

Kentaro Tomoeda (Contact Author)

University of Technology Sydney (UTS) - Department of Economics ( email )

Sydney
Australia

HOME PAGE: http://sites.google.com/site/kentarotomoeda/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
5
Abstract Views
136
PlumX Metrics