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An extended uniform-price auction mechanism of homogeneous divisible goods: supply optimisation and non-strategic bidding

Author

Listed:
  • Congjun Rao
  • Yong Zhao
  • Junjun Zheng
  • Cheng Wang
  • Zhongwen Chen

Abstract

In an extended uniform-price auction mechanism of homogeneous divisible goods, strategic buyers and non-strategic buyers are allowed to participate in the auction simultaneously, and the optimal supply to strategic buyers is determined by a seller after having observed the bids. For both nonlinear bids and linear bids given by symmetric buyers, pure strategy symmetric Nash equilibriums are analysed, and then the dominant relationship is discussed deeply between the two kinds of equilibrium bids. Some conclusions are drawn about this extended uniform-price auction mechanism, i.e. nonlinear equilibrium bids dominate linear ones, and the supply optimisation can effectively reduce the buyers’ market power and thus eliminate many underpricing equilibriums. Moreover, several suggestions are given on how to choose optimal bidding strategies for buyers and how to design an optimal mechanism for a seller.

Suggested Citation

  • Congjun Rao & Yong Zhao & Junjun Zheng & Cheng Wang & Zhongwen Chen, 2016. "An extended uniform-price auction mechanism of homogeneous divisible goods: supply optimisation and non-strategic bidding," International Journal of Production Research, Taylor & Francis Journals, vol. 54(13), pages 4028-4042, July.
    • Handle: RePEc:taf:tprsxx:v:54:y:2016:i:13:p:4028-4042
    DOI: 10.1080/00207543.2016.1171417
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    Cited by:

    1. Debin Fang & Qiyu Ren & Qian Yu, 2018. "How Elastic Demand Affects Bidding Strategy in Electricity Market: An Auction Approach," Energies, MDPI, vol. 12(1), pages 1-13, December.
    2. Congjun Rao & Mark Goh & Junjun Zheng, 2017. "Decision Mechanism for Supplier Selection Under Sustainability," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 16(01), pages 87-115, January.
    3. Congjun Rao & Yong Zhao & Junjun Zheng & Mark Goh & Cheng Wang, 2017. "Bidding Behavior and Equilibrium Excursion of Uniform Price Auction Mechanism," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(06), pages 1-17, December.

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