First-price auction implements efficient investments

Kentaro Tomoeda

Economics Letters, 2017, vol. 159, issue C, 198-200

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 (search for similar items in EconPapers)
JEL-codes: D44 D47 D82 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176517303361
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:159:y:2017:i:c:p:198-200

DOI: 10.1016/j.econlet.2017.08.013

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().