Modifying the Uniform-Price Auction to Eliminate ‘Collusive-Seeming Equilibria’
نویسنده
چکیده
The uniform-price auction is used in many regional electricity procurement auctions and its “collusive-seeming equilibria” have been linked to potential exercise of market power. Such equilibria do not exist, however, if a small amount of cash is split among rationed bidders. To shed light on what drives this result, I also examine variations in which the auctioneer is able to increase and/or decrease quantity after receiving the bids. “Increasable demand” also eliminates all collusive-seeming equilibria. These results suggest ways to modify the uniform-price auction in order to reduce the potential exercise of market power.
منابع مشابه
‘collusive-seeming Equilibria’ in the Uniform-price Auction
The fixed-supply uniform-price auction suffers from existence of “collusive-seeming equilibria” in which all bidders dramatically shade their bids and very low prices may be realized. Our main result is that such equilibria do not exist in a family of “money-prize perturbations” of the uniform-price auction, in which a small payment discount is split among all rationed bidders. To shed light on...
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When supply is fixed in advance, the uniform-price share auction is vulnerable to “collusive-seeming equilibria” in which the realized price is less than a common knowledge lower bound on all bidder’s per share value vi. Our main result is that no collusive-seeming equilibria exist in a variation of the uniform-price auction in which the auctioneer sets supply so as to maximize profits after re...
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