Effects of competition in first-price auctions

Gino Loyola

Economic Theory, 2021, vol. 71, issue 4, No 9, 1527-1567

Abstract: Abstract This paper analyzes the effects of industrial concentration on bidding behavior and expected revenues. These effects are studied under the CIAPI model, an affiliated value set-up that nests a variety of valuation and information environments. We formally decompose the revenue effects coming from less competition into five types. The properties of these effects are discussed and conditions for (non)monotonicity of both the equilibrium bid and revenue are stated. Our results suggest that it is more likely that the seller benefits from less competition in markets with more complete valuation and information structures.

Keywords: Competition; Bidding markets; Conditionally independent affiliated private information model; Affiliated common values; Affiliation effect; First-price auctions (search for similar items in EconPapers)
JEL-codes: C62 D44 D82 L41 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:joecth:v:71:y:2021:i:4:d:10.1007_s00199-021-01347-8

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DOI: 10.1007/s00199-021-01347-8

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