Multi-Unit Auctions: A Survey of Theoretical Literature

This article aims to provide a comprehensive survey of the theoretical research on multi-unit auctions to help identify the gap in this literature. Multi-unit auctions have been extensively used in practise and account for significant amount of transactions in some real-world markets. However, the theoretical research on these auctions has attract less attention compared to single unit auctions. The focus of this article is on those research that study multi-unit auctions for the sale of multiple units of homogeneous objects to potential buyers with more than one unit demand. The articles are categorized based on the assumptions of their models regarding bidders' values and the type of auction. Further the gap in this literature is identified with those areas that require further theoretical research

Discriminatory versus uniform-price auctions : an empirical analysis of the brazilian treasury auctions

Dissertação (mestrado)—Universidade de Brasília, Programa de Pós-Graduação em Economia, 2014.Este trabalho tem como objetivo determinar qual o melhor desenho para os leilões de títulos públicos da Secretaria do Tesouro Nacional em termos de geração de receita: leilões de preço uniforme ou leilões de preços múltiplos. Desde a década de 60, economistas têm debatido sobre o desenho ótimo para leilões de múltiplas unidades. Desde então, a literatura teórica tem desenvolvido argumentos a favor de ambos os tipos de leilão. Além disso, literatura empírica vem aplicando repetidas vezes métodos empíricos a dados de leilões de títulos públicos, também chegando a resultados ambíguos. Após realizar uma cuidadosa revisão da literatura, empregamos métodos empíricos a dados dos leilões do Tesouro Nacional, de modo a determinar o melhor formato de leilão para o Tesouro Nacional. ______________________________________________________________________________ ABSTRACTOur research aims to determine the best auction format for the Brazilian National Treasury auctions in terms of revenue: uniform-price or discriminatory auctions. Since the 1960’s, economists have debated the optimal design of Treasury auctions. Since then, theoretical literature has developed arguments favoring either type of auctions. Furthermore, empirical literature has repeatedly applied empirical methods to data from Treasury auctions, also reaching ambiguous results. After conducting a careful literature review, we apply empirical methods to Brazilian Treasury auction data and determine the best auction format for the Brazilian Treasury

Competitive Bidding in Supply Chains

This thesis is primarily concerned with the competition between suppliers for a buyer’s procurement business with consideration of subcontracting, commitment and capacity reservation. Under the circumstance where suppliers face diseconomies of scale, it may be cost effective for a buyer to split an order across different suppliers. Even when the buyer chooses only one supplier, the winning supplier may subcontract part of the work to the others subsequently. Motivated by these observations, Chapter 2 studies a supplier bidding game where a buyer requests quotes from two competing suppliers. We consider two procurement scenarios: (1) Order Splitting where each supplier submits a function bid which specifies different payments for different quantities, and the buyer may split the order; (2) Single-Sourcing Commitment where the buyer commits to purchasing from only one supplier before suppliers submit their bids, and the winning supplier may subsequently subcontract with the losing one. The second and third papers investigate the competitive behaviour of suppliers with capacity reservation. To hedge against financial risks, the suppliers often require a buyer to reserve capacity in advance by paying an upfront fee. In Chapter 3, we consider a discrete version of this problem where competing suppliers each choose a reservation price and an execution price for blocks of capacity, and the buyer needs to decide which blocks to reserve. Chapter 4 studies a continuous version of the problem where we allow general cost functions. The suppliers compete by offering the price functions (for reservation and execution) and the buyer decides how much to reserve from each supplier. This thesis sheds light on how suppliers compete with each other by considering a variety of factors. We believe an in-depth look at the competitive behaviour of suppliers will deepen our understanding of a buyer’s procurement process, and hence helps a buyer make a better sourcing decision

Competitive Bidding in Supply Chains

This thesis is primarily concerned with the competition between suppliers for a buyer’s procurement business with consideration of subcontracting, commitment and capacity reservation. Under the circumstance where suppliers face diseconomies of scale, it may be cost effective for a buyer to split an order across different suppliers. Even when the buyer chooses only one supplier, the winning supplier may subcontract part of the work to the others subsequently. Motivated by these observations, Chapter 2 studies a supplier bidding game where a buyer requests quotes from two competing suppliers. We consider two procurement scenarios: (1) Order Splitting where each supplier submits a function bid which specifies different payments for different quantities, and the buyer may split the order; (2) Single-Sourcing Commitment where the buyer commits to purchasing from only one supplier before suppliers submit their bids, and the winning supplier may subsequently subcontract with the losing one. The second and third papers investigate the competitive behaviour of suppliers with capacity reservation. To hedge against financial risks, the suppliers often require a buyer to reserve capacity in advance by paying an upfront fee. In Chapter 3, we consider a discrete version of this problem where competing suppliers each choose a reservation price and an execution price for blocks of capacity, and the buyer needs to decide which blocks to reserve. Chapter 4 studies a continuous version of the problem where we allow general cost functions. The suppliers compete by offering the price functions (for reservation and execution) and the buyer decides how much to reserve from each supplier. This thesis sheds light on how suppliers compete with each other by considering a variety of factors. We believe an in-depth look at the competitive behaviour of suppliers will deepen our understanding of a buyer’s procurement process, and hence helps a buyer make a better sourcing decision

Revenue and Efficiency in Multi-Unit Uniform-Price Auctions

I show that in a private value multi-unit uniform-price auction, the reservation price increases both the efficiency and revenue. In equilibrium the difference between the true value of a unit and the submitted bid (shading) is different for each unit; therefore, the seller cannot allocate units efficiently, i.e., to those who value them the most. When the seller increases the reservation price, the bidders increase their bids on the units with greater shading. Then more often the units are allocated among those who have higher values for them, that is, efficient, although some bidders with a low value do not participate in the auction. In contrast to some other auction formats, for a low range of reservation prices, the higher the reservation price, the higher is both the expected efficiency and revenueMulti-unit auction, multiple-object auction, market efficiency, optimal selling mechanism, discriminatory and uniform price auction with reservation price.