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

Marco LiCalz and Alessandro Pavan

No 1495, Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science

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: D4 E58 (search for similar items in EconPapers)
Date: 2002-11
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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 in Uniform-Price Auctions (2003)
Working Paper: Tilting the Supply Schedule to Enhance Competition in Uniform- Price Auctions (2002)
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