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Profit Maximizing in Auctions of Public Goods

Dirk Alboth, Anat Lerner () and Jonathan Shalev ()
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Dirk Alboth: Paderborn University

Game Theory and Information from University Library of Munich, Germany

Abstract: A profit-maximizing auctioneer can provide a public good to a group of agents. Each group member has a private value for the good being provided to the group. We investigate an auction mechanism where the auctioneer provides the good to the group, only if the sum of their bids exceeds a reserve price declared previously by the auctioneer. For the two-bidder case with private values drawn from a uniform distribution we characterize the continuously differentiable symmetric equilibrium bidding functions for the agents, and find the optimal reserve price for the auctioneer when such functions are used by the bidders. We also examine another interesting family of equilibrium bidding functions for this case, with a discrete number of possible bids, and show the relation (in the limit) to the differentiable bidding functions.

Keywords: public goods; auctions; externalities (search for similar items in EconPapers)
JEL-codes: C00 C72 D44 D82 H41 (search for similar items in EconPapers)
Pages: 32 pages
Date: 1997-07-22, Revised 1998-04-01
New Economics Papers: this item is included in nep-gth, nep-mic, nep-pbe and nep-pub
Note: Type of Document - LaTeX; prepared on IBM PC; to print on PostScript; pages: 32 ; figures: 3 eps files included. Comments welcome
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Related works:
Journal Article: Profit Maximizing in Auctions of Public Goods (2001) Downloads
Working Paper: Profit maximizing in auctions of public goods (2001) Downloads
Working Paper: Profit maximizing in auctions of public goods (1998) Downloads
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