Multiple-Unit English Auctions

Download or read book Multiple-Unit English Auctions written by Flavio M. Menezes and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the outcome of an ascending-price multiple-object auction. Two bidders facing continuous, downward sloping demand functions participate in the auction of some divisible objects. The auctioneer starts the process by announcing an initial price and by asking both bidders to submit sealed-bids (desired quantities). The auctioneer increases the price until the total amount bid for is less than the total supply. The US Treasury proposed a similar format to sell Tbills but decided to shelve the idea temporarily. Moreover, this mechanism has been used to sell stocks of government owned companies under the privatization program in Brazil. We compute the outcome of this auction game under full information and conclude that this mechanism has perverse effects in terms of revenue maximization.