Pro-Competitive Rationing in Multi-Unit Auctions

Pär Holmberg

No 1037, Working Paper Series from Research Institute of Industrial Economics

Abstract: In multi-unit auctions, such as auctions of commodities and securities, and financial exchanges, it is necessary to specify rationing rules to break ties between multiple marginal bids. The standard approach in the literature and in practice is to ration marginal bids proportionally. This paper shows how bidding can be made more competitive if the rationing rule instead gives increasing priority to bidders with a small volume of marginal bids at clearing prices closer to the reservation price. In comparison to standard rationing, such a rule can have almost the same effect on the competitiveness of bids as a doubling of the number of bidders.

Keywords: C72; D44; D45 (search for similar items in EconPapers)
JEL-codes: C72 D44 D45 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2014-08-22
New Economics Papers: this item is included in nep-com, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Holmberg, Pär, 'Pro-Competitive Rationing in Multi-Unit Auctions' in The Economic Journal, 2017, pages 372-395.

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Related works:
Journal Article: Pro‐competitive Rationing in Multi‐unit Auctions (2017)
Working Paper: Pro-competitive rationing in multi-unit auctions (2014)
Working Paper: Pro-competitive rationing in multi-unit auctions (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:1037

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