Affiliation in Multi-Unit Discriminatory Auctions

Ahmed Anwar ()

Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: We extend Milgrom and Weber's affiliated valuations model to the multi-unit case with constant marginal valuations where 2 bidders compete for k identical objects. We show that the discriminatory auction has a unique equilibrium, that corresponds to Milgrom and Weber's first price equilibrium. This unique equilibrium therefore leads to lower expected prices than the equilibrium of the English auction where the units are bundled together. Hence we show that in a common value auction of a single object where the object can be divided into k parts, it is not possible to increase revenue by using a multi-unit discriminatory auction. We discuss a possible application to Treasury auctions.

Keywords: affiliated valuations; multi-unit auctions; treasury auctions (search for similar items in EconPapers)
JEL-codes: C72 D44 D82 (search for similar items in EconPapers)
Pages: 16
Date: 2002-06
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:58

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