Tilting the Supply Schedule to Enhance Competition in Uniform-Price Auctions

Marco LiCalzi and Alessandro Pavan

No 2003.22, Working Papers from Fondazione Eni Enrico Mattei

Abstract: Uniform-price auctions of a divisible good in fixed supply admit underpricing equilibria, where bidders submit high inframarginal bids to prevent competition on prices. The seller can obstruct this behavior by tilting her supply schedule and making the amount of divisible good on offer change endogenously with its (uniform) price. Precommitting to an increasing supply curve is a strategic instrument to reward aggressive bidding and enhance expected revenue. A fixed supply may not be optimal even when accounting for the cost to the seller of issuing a quantity different from her target supply.

Keywords: Uniform-price auction; divisible good; strategic role of the seller; endogenous supply; Treasury and IPO auctions (search for similar items in EconPapers)
JEL-codes: D44 E58 (search for similar items in EconPapers)
Date: 2003-03
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Tilting the supply schedule to enhance competition in uniform-price auctions (2005)
Working Paper: Tilting the Supply Schedule to Enhance Competition on Uniform-Price Auctions (2002)
Working Paper: Tilting the Supply Schedule to Enhance Competition in Uniform- Price Auctions (2002)
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