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On the Concentration of Allocations and Comparisons of Auctions in Large Economies

Jackson, Matthew O. and Kremer, Ilan (2002) On the Concentration of Allocations and Comparisons of Auctions in Large Economies. Social Science Working Paper, 1146. California Institute of Technology , Pasadena, CA. (Unpublished) https://resolver.caltech.edu/CaltechAUTHORS:20170802-144326047

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Abstract

We analyze competitive pressures in a sequence of auctions with a growing number of bidders, in a model that includes private and common valuations as special cases. We show that the key determinant of bidders' surplus (and implicitly auction revenue) is how the goods are distributed. In any setting and sequence of auctions where the allocation of good(s) is concentrated among a shrinking proportion of the population, the winning bidders enjoy no surplus in the limit. If instead the good(s) are allocated in a dispersed manner so that a non-vanishing proportion of the bidders obtain objects, then in any of a wide class of auctions bidders enjoy a surplus that is bounded away from zero. Moreover, under dispersed allocations, the format of the auction matters. If bidders have constant marginal utilities for objects up to some limit, then uniform price auctions lead to higher revenue than discriminatory auctions. If agents have decreasing marginal utilities for objects, then uniform price auctions are asymptotically efficient, while discriminatory auctions are asymptotically inefficient. Finally, we show that in some cases where dispersed allocations are efficient, revenue may increase by bundling goods at the expense of efficiency.


Item Type:Report or Paper (Working Paper)
ORCID:
AuthorORCID
Jackson, Matthew O.0000-0001-9846-4249
Group:Social Science Working Papers
Subject Keywords:auction, competition, mechanism, asymptotic efficiency, revenue equivalence
Series Name:Social Science Working Paper
Issue or Number:1146
Classification Code:JEL: D44, C72, D41, G14
Record Number:CaltechAUTHORS:20170802-144326047
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20170802-144326047
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79781
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:02 Aug 2017 23:49
Last Modified:03 Oct 2019 18:23

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