Revenue-capped efficient auctions

Muto, Nozomu, Shirata, Yasuhiro and Yamashita, Takuro (2018) Revenue-capped efficient auctions. TSE Working Paper, n. 18-940, Toulouse

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Official URL: http://tse-fr.eu/pub/32883

Abstract

We study an auction that maximizes the expected social surplus under an upperbound constraint on the seller's expected revenue, which we call a revenue cap. Such a constrained-efficient auction may arise, for example, when: (i) the auction designer is "pro-buyer", that is, he maximizes the weighted sum of the buyers' and seller's auction payoffs, where the weight for the buyers is greater than that for the seller; (ii) the auction designer maximizes the (unweighted) total surplus in a multi-unit auction in which the number of units the seller owns is private information; or (iii) multiple sellers compete to attract buyers before the auction. We characterize the mechanisms for constrained-efficient auctions and identify their important properties. First, the seller sets no reserve price and sells the good for sure. Second, with a nontrivial revenue cap, "bunching" is necessary. Finally, with a sufficiently severe revenue cap, the constrained-efficient auction has a bid cap, so that bunching occurs at least "at the top," that is, "no distortion at the top" fails.

Item Type: Monograph (Working Paper)
Language: English
Date: July 2018
Place of Publication: Toulouse
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 25 Jul 2018 07:29
Last Modified: 25 Jul 2018 07:29
OAI ID: oai:tse-fr.eu:32883
URI: http://publications.ut-capitole.fr/id/eprint/26154

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