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Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/26193

Title: Simultaneous Ascending Bid Auctions with Budget Constraints
Authors: Brusco, Sandro
Lopomo, Giuseppe
Keywords: Auctions
Multiple Objects
Collusion
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.
URI: http://hdl.handle.net/2451/26193
Appears in Collections:Economics Working Papers

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