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Free Riding in Combinatorial First-Price Sealed-Bid Auctions
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François Maréchal
Veröffentlicht/Copyright:
9. Dezember 2009
We consider an allotted procurement contract awarded by means of a combinatorial first-price sealed-bid auction. Two small firms and a larger firm are competing. Each small firm is interested in a single lot whereas the large firm transmits a global offer. Under a specific informational framework, we derive the asymmetric combinatorial equilibrium bidding strategies and show that they exhibit a free-riding effect. We show that this effect is increasing with the level of uncertainty and decreasing with risk aversion. When all the firms are risk neutral or equally risk averse, the magnitude of the free-riding effect is unaffected by the division of the contract chosen by the public buyer. Nevertheless, when each firm exhibits its own risk aversion parameter, we find that the free-riding effect is reduced (resp. increased) as the more risk averse small firm competes for a larger (resp. smaller) part of the contract.
Keywords: free-riding; combinatorial auctions
Published Online: 2009-12-9
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Artikel in diesem Heft
- Advances Article
- Private Information of Nonpaternalistic Altruism: Exaggeration and Reciprocation of Generosity
- Satisficing: A 'Pretty Good' Heuristic
- Optimal Auctions with Simultaneous and Costly Participation
- Temptations in General Settings
- Learning in Bayesian Games with Binary Actions
- Contracting in the Presence of Judicial Agency
- Updating Ambiguity Averse Preferences
- Competition May Reduce the Revenue in a First Price Auction with Affiliated Private Values
- Topics Article
- Incentive Schemes in Peer-to-Peer Networks
- Why (and When) are Preferences Convex? Threshold Effects and Uncertain Quality
- A Two-Step Subsidy Scheme to Overcome Network Externalities in a Dynamic Game
- Oligopolistic Certification
- Envy-Free and Efficient Minimal Rights: Recursive No-Envy
- Risk Premiums versus Waiting-Options Premiums: A Simple Numerical Example
- Inflation, Self Insurance and the Friedman Rule in Economies with Uninsurable Idiosyncratic Risks
- Advertising and Cost Reduction
- Directed Search, Rationing and Wage Dispersion
- Optimism and Bargaining Inefficiency
- Fair Depreciation: A Shapley Value Approach
- Product Variety, Scale Economies, and Environmental Taxes
- Market Competition and Lower Tier Incentives
- Vertical Differentiation, Social Networks and Compatibility Decisions
- Asymmetric Bertrand-Edgeworth Oligopoly and Mergers
- Consumer Rationing and the Cournot Outcome
- Representations and Identities for Homogeneous Technologies
- Monitoring Gains and Decentralization
- Cross-Cultural Trade and Institutional Stability
- Universal Service Obligations and Competition with Asymmetric Information
- A Duopoly Model of Political Agency with Applications to Anti-Corruption Reform
- Simple Economies with Multiple Equilibria
- A Note on Herbert Gintis' "Emergence of a Price System from Decentralized Bilateral Exchange"
- Contributions Article
- Continuous Preferences and Discontinuous Choices: How Altruists Respond to Incentives
- Reputation, Career Concerns, and Job Assignments
- Fluctuations in Overlapping Generations Economies
- Principal and Expert Agent
- Sale of a Deteriorating Asset via Sequential Search
- The Efficiency of Observability and Mutual Linkage
- A Positive Theory of Income Taxation
- Supply Theory sans Profit Maximization
- The Dynamics of Collective Reputation
- Identifying Community Structures from Network Data via Maximum Likelihood Methods
- Income Distribution, Market Structure, and Individual Welfare
- Free Riding in Combinatorial First-Price Sealed-Bid Auctions
- Geometric Asymptotic Approximation of Value Functions
- Sequential Auctions with Multi-Unit Demands
