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Title:Tilting the supply schedule to enhance competition in uniform-price auctions PDF Logo
Authors:LiCalzi, Marco
Pavan, Alessandro
Issue Date:2002
Series/Report no.:Discussion Paper, Center for Mathematical Studies in Economics and Management Science 1495
Abstract:Uniform-price auctions of a divisible good in fixed supply admit underpricing equilibria, where bidders submit high inframarginal bids to prevent competition on prices. The seller can obstruct this behavior by tilting her supply schedule and making the amount of divisible good on offer change endogenously with its (uniform) price. Precommitting to an increasing supply curve is a strategic instrument to reward aggressive bidding and enhance expected revenue. A fixed supply may not be optimal even when accounting for the cost to the seller of issuing a quantity different from her target supply.
Subjects:uniform-price auction
divisible good
strategic role of the seller
endogenous supply
Treasury and IPO auctions
JEL:D44
E58
Document Type:Working Paper
Appears in Collections:Discussion Papers, Kellogg School of Management, Northwestern University

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