Allocating multiple units |
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Authors: | Kala Krishna Torben Tranæ s |
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Institution: | (1) Department of Economics, Pennsylvania State University, PA 16802, USA, and NBER, USA (e-mail: kmk4@psu.edu) , US;(2) Institute of Economics, CIE, and EPRU, University of Copenhagen, 1455 Copenhagen, DENMARK , DK |
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Abstract: | Summary. This paper studies the allocation and rent distribution in multi-unit, combinatorial-bid auctions under complete information.
We focus on the natural multi-unit analogue of the first-price auction, where buyers bid total payments, pay their bids, and
where the seller allocates goods to maximize his revenue. While there are many equilibria in this auction, only efficient
equilibria remain when the truthful equilibrium restriction of the menu-auction literature is used. Focusing on these equilibria
we first show that the first-price auction just described is revenue and outcome equivalent to a Vickrey auction, which is
the multi unit analogue of a second-price auction. Furthermore, we characterize these equilibria when valuations take a number
of different forms: diminishing marginal valuations, increasing average valuations, and marginal valuations with single turning
points.
Received: December 23, 1999; revised version: December 10, 2001 |
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Keywords: | and Phrases: Menu auctions Multiple-unit auctions First-price vs second-price auctions Revenue equivalence |
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