Identificador: PC:2890
Autores: Vives, Xavier; Manzano, Carolina
Resumen:
We analyze a divisible good uniform-price auction that features two groups each with a Önite number of identical bidders. At equilibrium the relative market power (price impact) of a group increases with the precision of its private information and declines with its transaction costs. An increase in transaction costs and/or a decrease in the precision of a bidding groupís information induces a strategic response from the other group, which thereafter attenuates its response to both private information and prices. A 'stronger' bidding group -which has more precise private information, faces lower transaction costs, and is more oligopsonistic- has more price impact and so will behave competitively only if it receives a higher per capita subsidy rate. When the strong group values the asset no less than the weak group, the expected deadweight loss increases with the quantity auctioned and also with the degree of payo§ asymmetries. Price impact and the deadweight loss may be negatively associated. The results are consistent with the available empirical evidence. KEYWORDS: demand/supply schedule competition, private information, liquidity auctions, Treasury auctions, electricity auctions, market integration. JEL: D44, D82, G14, E58
Repositori URV