Asymptotic properties of equilibrium in discriminatory and uniform price ipv multi-unit auctions

This paper confronts the tractability problems that accompany IPV auction models with multi-unit bidder demands. Utilizing a first order approach, the asymptotic properties of symmetric equilibria in discriminatory and uniform price auctions are derived. It is shown that as the number of bidders increases, equilibrium bids converge to valuations in both discriminatory auctions and uniform price auctions where the price paid is determined by the lowest winning bid, thus indicating that the limiting case of these auctions correspond to price taking as in neoclassical models of consumer behavior. However, when the uniform price paid is tied to the highest losing bid, price taking behavior does not ensue and ex post inefficient allocations ares possible. The impact of our results on analysis of k-double auctions with multi-unit bidders demands is also discussed.multi-unit auction, asymptotic equilibrium, efficiency

Socially Beneficial Mergers: A New Class of Concentration Indices

The prominent Herfindahl-Hirschman index (HHI), yields a higher concentration level in response to any merger between firms, implying that any merger will decrease the social welfare. Although HHI is used by the Anti-trust Division of the U.S. Department of Justice (AD-DoJ), its merger implications are not fully embraced by the anti-trust authorities. We propose a class of concentration indices that is in line with the spirit of the AD-DoJ’s merger policies and consider different theoretical models which indicate that the AD-DoJ is justified in allowing mergers especially among smaller firms, as they counter the market power of dominant firms.Horizontal Mergers, Industry Concentration, the Anti-Trust Division, Hirfindahl-Hirschman Index (HHI), Dominant Firm(s)

Optimal monetary impulse-response functions in a matching model

The effects on ex ante optima of a lag in seeing monetary realizations are studied using a matching model of money. The main new ingredient in the model is meetings in which producers have more information than consumers. A consequence is that increases in the amount of money that occur with small enough probability can have negative impact effects on output, because it is optimal to shut down trade in such low probability meetings rather than have lower output when high probability realizations occur. The information lag also produces prices that do not respond much to current monetary realizations.Money supply ; Prices ; Production (Economic theory)

Optimal Monetary Impulse-Response Functions in a Matching Model

The effects on ex ante optima of a lag in seeing monetary realizations are studied using a matching model of money. The main new ingredient in the model is meetings in which producers have more information than consumers. A consequence is that increases in the amount of money that occur with small enough probability can have negative impact effects on output, because it is optimal to shut down trade in such low probability meetings rather than have lower output when high probability realizations occur. The information lag also produces prices that do not respond much to current monetary realizations.

The Impact of Lending, Borrowing, and Anti-Smoking Policies on Cigarette Consumption by Teens

A major factor contributing to smoking initiation and experimentation by teenagers is the ability to 'bum' cigarettes. Yet research until now has ignored the impact of a lending/borrowing market on the smoking decisions of teenagers. In this paper, we develop a theoretical model where smoking decisions are determined by an individual's utility maximization process that includes an incentive to lend cigarettes. Predictions from this model are tested using data from the Youth Risk Behavior Surveys that can distinguish between teens who primarily buy and those who primarily bum their cigarettes. We show the ways in which price and restrictions on smoking will impact the decision to buy or bum cigarettes, as well as the impact on the allocation of purchased cigarettes between those self-consumed and those lent to others. Key results indicate that as prices and restrictions increase, teenagers are less likely to be regular smokers who purchase cigarettes and are more likely to consume smaller quantities obtained via the lending market. The basic conclusions are that anti-smoking policies have significant effects on the quantity of cigarettes consumed by teens and that these policies can help reduce the number of teens that escalate from experimental to regular smoking.

Reducing Healthcare Costs Requires Good Market Design

Healthcare costs are no doubt too high, and Congress has been pushing for 13 years to harness market forces in Medicare procurement. But despite all this time, we are on the precipice of adopting a very poor market design, according to Peter Cramton of University of Maryland and Brett Katzman of Kennesaw State University

Comment on Hoerger: Early Pilots of Medicare Auctions Brings No Solace to Auction Experts

Peter Cramton and Brett Katzman stick to their guns: Medicare auctions remain fatally flawed and must be fixed. They argue that contrary to Hoerger\u27s comment, no comfort can be drawn from the fact that the market was able to withstand price reductions in early pilots

The Consequences of Information Revealed in Auctions

This paper considers the ramifications of post-auction competition on bidding behavior under different bid announcement policies. In equilibrium, the auctioneer’s announcement policy has two distinct effects. First, announcement entices players to signal information to their post-auction competitors through their bids. Second, announcement can lead to greater bidder participation in certain instances while limiting participation in others. Specifically, the participation effect works against the signalling effect, thus reducing the impact of signalling found in other papers. Revenue, efficiency, and surplus implications of various announcement policies are examined