Stern School of Business >
Economics Working Papers >
Please use this identifier to cite or link to this item:
|Title: ||Simultaneous Ascending Bid Auctions with Budget Constraints|
|Authors: ||Brusco, Sandro|
|Issue Date: ||Aug-2002|
|Series/Report no.: ||EC-02-14|
|Abstract: ||We identify and analyze three distinct effects arising from potentially binding budget constraints in multi-unit ascending auctions. First, binding budgets clearly reduce the level of competition among bidders. Second, budget constraints may at the same time make it difficult to sustain collusive equilibria when bidders lack sufficient resources to ‘punish’ defectors.
Third, the mere possibility, even if arbitrarily small, of binding budget constraints can reduce competition substantially because bidders can ‘pretend’ to be constrained, even if they are not.
In this cases, measures restricting the participation of low-budget bidders, e.g. reserve prices, can increase social welfare.|
|Appears in Collections:||Economics Working Papers|
Items in Faculty Digital Archive are protected by copyright, with all rights reserved, unless otherwise indicated.