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Published August 1, 2017 | Submitted
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The Relevance of a Choice of Auction Format in a Competitive Environment

Abstract

We examine the relevance of an auction format in a competitive environment by analyzing and comparing uniform and discriminatory price auctions with many bidders. We show that if the number of objects for sale is small relative to the number of bidders, then all equilibria of both auctions are approximately efficient and lead to approximately the same revenue. When the number of objects for sale is proportional to the number of bidders, then the particulars of the auction format matter. All equilibria of the uniform auction are efficient while all of the equilibria of the discriminatory auction are inefficient. The relative revenue rankings of the auction formats can go in either direction, depending on the specifics of the environment.

Additional Information

We are grateful for financial support from the National Science Foundation under grant SES-9986190. We thank Jeremy Bulow, Tom Palfrey, and Jeroen Swinkels for helpful conversations and suggestions on earlier drafts, and seminar participants at various places for the comments. Published as Jackson, M.O., & Kremer, I. (2006). The relevance of a choice of auction format in a competitive environment. The Review of Economic Studies, 73(4), 961-981.

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August 19, 2023
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