An experimental comparison of sequential first- and second-price auctions with synergiesKasper Leufkens (), Ronald Peeters () and Marc Vorsatz () No 55, Research Memoranda from Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization Abstract: The presence of synergies in recurrent procurement auctions leads to an exposure problem and asymmetries among bidders. We consider sequential first- and second-price auctions with synergies in a setting with four bidders. In a series of experiments we compare the performance of the two pricing formats for three different sizes of the synergy. We find that for small synergies, the first-price auction performs better in terms of efficiency, revenue, and the probability on losses. However, once the synergy factor becomes very large the performance of the two different pricing formats becomes more similar. We also find that even though the potential total surplus that can be divided between buyers and seller increases in the synergy factor, subjects’ earnings within a pricing rule do not significantly change in the synergy factor. Finally, we observe that the two pricing formats give rise to different price trends within the auction sequence. In general, our results provide support for the common use of first-price instead of second-price auctions for public procurement. Keywords: industrial organization (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:dgr:umamet:2007055 Access Statistics for this paper More papers in Research Memoranda from Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization |
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