Scandinavian Working Papers in Economics

Working Papers,
Copenhagen Business School, Department of Economics

No 01-2016: Bid Regulations in a Multi-unit Uniform Price Auction

Anette Boom ()
Additional contact information
Anette Boom: Department of Economics, Copenhagen Business School, Postal: Department of Economics, Copenhagen Business School, Porcelænshaven 16A, 1, DK-2000 Frederiksberg, Denmark

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 bid floors.

Keywords: Multi-unit Auctions; Heterogenous Bidders; Bid Regulation

JEL-codes: D43; D44; L12; L13; L51

38 pages, December 1, 2016

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