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Strategic Bidding in Product-Mix, Sequential, and Simultaneous Auctions

Author

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  • Simon Finster

    (Nuffield College and Department of Economics, University of Oxford)

Abstract

We study equilibria in Product-Mix, sequential, and simultaneous auctions, which are used to sell differentiated, indivisible goods. A flexible bidder with unit demand, interested in buying any of the goods, competes against several inflexible bidders, each interested in only one specific good. For first-price and second-price payments, we obtain theoretical results on equilibrium bidding, and compare efficiency, revenue, and bidder surplus numerically. Differences in outcomes between Product-Mix and sequential auctions are small for a range of value distributions. The simultaneous auction performs worst in all dimensions, and differences in performance vary substantially with the degree of competition the flexible bidder faces.

Suggested Citation

  • Simon Finster, 2020. "Strategic Bidding in Product-Mix, Sequential, and Simultaneous Auctions," Economics Papers 2020-W03, Economics Group, Nuffield College, University of Oxford.
    • Handle: RePEc:nuf:econwp:2003
    as

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    File URL: https://www.nuffield.ox.ac.uk/economics/Papers/2020/2020W03_pma_strategic_5.pdf
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    References listed on IDEAS

    as
    1. Albano, Gian Luigi & Germano, Fabrizio & Lovo, Stefano, 2001. "A comparison of standard multi-unit auctions with synergies," Economics Letters, Elsevier, vol. 71(1), pages 55-60, April.
    2. Thomas R. Palfrey, 1980. "Multiple-Object, Discriminatory Auctions with Bidding Constraints: A Game-Theoretic Analysis," Management Science, INFORMS, vol. 26(9), pages 935-946, September.
    3. Paul Klemperer, 2010. "The Product-Mix Auction: A New Auction Design for Differentiated Goods," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 526-536, 04-05.
    4. Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, vol. 57(6), pages 1243-1277, November.
    5. Baisa, Brian & Burkett, Justin, 2018. "Large multi-unit auctions with a large bidder," Journal of Economic Theory, Elsevier, vol. 174(C), pages 1-15.
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    Cited by:

    1. Thomas Kittsteiner & Marion Ott & Richard Steinberg, 2022. "Competing Combinatorial Auctions," Information Systems Research, INFORMS, vol. 33(4), pages 1130-1137, December.

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    More about this item

    Keywords

    multi-unit auctions; asymmetric auctions; market power; menu auctions; sequential auctions; simultaneous auctions;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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