Optimal Procurement Auction for a Buyer with Downward Sloping Demand: More Simple Economics
Data
01.01.2004
01.01.2004
Autori
Roberto Burguet
Codice JEL
D44,D42
D44,D42
Parole chiave:
Auctions,Monopsony
Auctions,Monopsony
Publisher
Economy and Society
Economy and Society
Editor
Fausto Panunzi
Fausto Panunzi
A buyer with downward slopping demand faces a number of unit supply sellers. The paper characterizes optimal auctions in this setting. For the symmetric case, a uniform auction (with price equal to lowest rejected offer) is optimal when complemented with reserve prices for different quantities acquired. For asymmetric sellers, the optimal distortions are familiar. The problem is similar to the third degree discriminating monopsonist problem, just as in the unit (flat) demand case (Bulow-Roberts, 1989), and when the number of sellers (and the demand) grows their outcomes approach at the speed of the law of large numbers.