Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/171523 
Year of Publication: 
2008
Series/Report no.: 
Economics Working Paper Series No. 08/80
Publisher: 
ETH Zurich, CER-ETH - Center of Economic Research, Zurich
Abstract: 
We examine an auction in which the seller determines the supply after observing the bids. We compare the uniform price and the discriminatory auction in a setting of supply uncertainty. Uncertainty is caused by the interplay of two factors: the seller's private information about marginal cost, and the seller's incentive to sell the profit-maximizing quantity given the received bids. In every symmetric mixed strategy equilibrium, bidders submit higher bids in the uniform price auction than in the discriminatory auction. In the two-bidder case this result extends to the set of rationalizable strategies. As a consequence, we find that the uniform price auction generates higher expected revenue for the seller and higher trade volume.
Subjects: 
sealed bid multi-unit auctions
variable supply auctions
discriminatory and uniform price auctions
subgame perfect equilibria
rationalizable strategies
JEL: 
D44
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
620.15 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.