Optimal Procurement Auction for a Buyer with Downward Sloping Demand: More Simple Economics

Roberto Burguet

No 2004.144, Working Papers from Fondazione Eni Enrico Mattei

Abstract: A buyer with downward slopping demand faces a number of unit supply sellers. The paper characterizes optimal auctions in this setting. For the symmetric case, a uniform auction (with price equal to lowest rejected offer) is optimal when complemented with reserve prices for different quantities acquired. For asymmetric sellers, the optimal distortions are familiar. The problem is similar to the third degree discriminating monopsonist problem, just as in the unit (flat) demand case (Bulow-Roberts, 1989), and when the number of sellers (and the demand) grows their outcomes approach at the speed of the law of large numbers.

Keywords: Auctions; Monopsony (search for similar items in EconPapers)
JEL-codes: D42 D44 (search for similar items in EconPapers)
Date: 2004-12
New Economics Papers: this item is included in nep-com
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Working Paper: Optimal procurement auction for a buyer with downward sloping demand: more simple economics (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2004.144

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