Working Paper Series, Department of Economics, Copenhagen Business School
Bid Regulations in a Multi-unit Uniform Price Auction
Abstract: This paper examines the effect of bid regulations on the
range of potential equilibrium prices in a multi-unit uniform price auction
with heterogenous bidders. General bid caps destroy equilibria with prices
above the bid cap and create new equilibria with prices way below the cap.
A cap only for larger firms does not guarantee market prices below that
cap. A sufficiently high bid floor only for smaller firms destroys some or
all pure strategy equilibria despite their prices being above the bid
floor. With a general bid floor this happens only with considerably higher
Keywords: Multi-unit Auctions; Heterogenous Bidders; Bid Regulation; (follow links to similar papers)
JEL-Codes: D43; D44; L12; L13; L51; (follow links to similar papers)
38 pages, December 1, 2016
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