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Type | Working Paper |
Scope | Discipline-based scholarship |
Title | Auctions of homogeneous goods: a case for pay-as-bid |
Organization Unit | |
Authors |
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Language |
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Institution | Centre for Economic Policy Research |
Series Name | Discussion Paper Series |
Number | 15656 |
ISSN | 0265-8003 |
Number of Pages | 87 |
Date | 2021 |
Abstract Text | The pay-as-bid (or discriminatory) auction is a prominent format for selling homogenous goods such as treasury securities and commodities. We prove the uniqueness of its pure-strategy Bayesian Nash equilibrium and establish a tractable representation of equilibrium bids. Building on these results we analyze the optimal design of pay-as-bid auctions, as well as uniform-price auctions (the main alternative auction format), allowing for asymmetric information. We show that supply transparency and full disclosure are optimal in pay-as-bid, though not necessarily in uniform-price; pay-as-bid is revenue dominant and might be welfare dominant; and, under assumptions commonly imposed in empirical work, the two formats are revenue and welfare equivalent. |
Official URL | https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15656# |
Other Identification Number | merlin-id:20761 |
PDF File | Download from ZORA |
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