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  • FlowAuctions

    Rights statement: The final publication is available at Springer via http://dx.doi.org/10.1007/s00182-016-0549-3

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Flow auctions

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<mark>Journal publication date</mark>08/2017
<mark>Journal</mark>International Journal of Game Theory
Issue number3
Volume46
Number of pages11
Pages (from-to)655-665
Publication statusPublished
Early online date29/08/16
Original languageEnglish

Abstract

Flow goods (like electricity) are sold through auctions in a dynamic framework. An important design question is the frequency of such auctions. We use a simple dynamic auction model in continuous time to answer this question. We focus on the relationship between the persistency of bidders’ valuations and the optimal choice of frequency. If the seller focuses on the equilibrium in which bidders follow a repeated static Nash strategy, then the frequency of auctions should typically increase when persistency declines. However, accounting for the fact that bidders can follow different equilibria that are collusive in nature, the comparative statics are reversed, forcing the seller to reduce the frequency when bidders’ valuations are less persistent. The argument builds on the fact that high frequency auctions are more conducive to collusion among bidders. © 2016, Springer-Verlag Berlin Heidelberg.

Bibliographic note

The final publication is available at Springer via http://dx.doi.org/10.1007/s00182-016-0549-3