« Previous | Contents | Next »
Listen
Appendix 4
Simultaneous sealed-bid multiple identical unit procurement auction with symmetric IPVs | DISCRIMINATORY PRICE AUCTION | UNIFORM PRICE AUCTION | GEN'd VICKREY PRICE AUCTION (also called Vickrey-Groves-Ledyard) |
|---|
Key determinants of bidder behaviour and auction performance ==> | Low competition | High competition | Low competition | High competition | Low competition | High competition |
|---|
| Constant MC curve | Increasing MC curve | Constant MC curve | Increasing MC curve | Constant MC curve | Increasing MC curve | Constant MC curve | Increasing MC curve | Constant MC curve | Increasing MC curve | Constant MC curve | Increasing MC curve |
Bidder behaviour | Bidder truthfulness | Overbidding is optimal | Higher frequency of truthful bidding | Lower frequency of truthful bidding | High frequency of truthful bidding |
Type of bid distortion | Lower frequency of supply inflation(1) | Higher frequency of high flat bidding | Higher frequency of supply inflation | Lower frequency of high flat bidding | With heterogenous bidders, truthful bidding from small capacity bidders (but lower than under GVA) | | Supply inflation from large capital bidders - but more truthful | | | | |
Auction performance | Budget cost-effectiveness | Highest distortion of true costs | When bidders are heterogenous, more expensive due to large bidders who overbid on last units | | Roughly as expensive as GVA | Least expensive (per unit). Lowest distortion of true costs but can still be significant |
More cost-effective than Uniform Auc when bidders heterogenous | Less cost-effective than Uniform Auc when bidders homogenous | | | | | Especially true with const MC | | | Roughly as expensive as Uniform |
Economic efficiency | Least efficient | Intermediate efficiency | Most efficient |
Distortion of true social costs remain small across all auction formats (under linear specification of demand function) |
© Steven Schilizzi, from paper written by A. Hailu and S. Thoyer (2005), "What format for multi-unit auctions: Uniform, discriminatory or generalized Vickrey?
NOTES :
IPVs = Independent Private Values
MC curve = Marginal Cost curve
GVA = Generalized Vickerey Auction (3rd format)
(1) but with less competitive cost structures
« Previous | Contents | Next »