Munich Personal RePEc Archive

Strategic Price Discounting and Rationing in Uniform Price Auctions

Bourjade, Sylvain (2003): Strategic Price Discounting and Rationing in Uniform Price Auctions.

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Abstract

Uniform price auctions admit a continuum of collusive seeming equilibria due to bidders' market power. In this paper, I modify the auction rules in allowing the seller to ration strategic bidders in order to ensure small bidders' participation. I show that many of these "bad" equilibria disappear when strategic bidders do not know small bidders' willingness to pay. Moreover, when the seller is unconstrained in the quantity she can allocate to small bidders, the unique equilibrium price is the highest that the seller could get.

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