The Relevance of a Choice of Auction Format in a Competitive Environment

Matther O. Jackson and Ilan Kremer

No 1190, Working Papers from California Institute of Technology, Division of the Humanities and Social Sciences

Abstract: We examine the relevance of an auction format in a competitive environment by analyzing and comparing uniform and discriminatory price auctions with many bidders. We show that if the number of objects for sale is small relative to the number of bidders, then all equilibria of both auctions are approximately efficient and lead to approximately the same revenue. When the number of objects for sale is proportional to the number of bidders, then the particulars of the auction format matter. All equilibria of the uniform auction are efficient while all of the equilibria of the discriminatory auction are inefficient. The relative revenue rankings of the auction formats can go in either direction, depending on the specifics of the environment.

Keywords: auction; competition; discriminatory auction; uniform price auction; Vickrey auction; efficiency; fully revealing prices (search for similar items in EconPapers)
Pages: 28 pages
Date: 2004-01
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Published: Published in Review of Economic Studies, V. 73, #4, 2006, ppg. 941-960

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