TY - JOUR

T1 - Profit Maximizing in Auctions of Public Goods

AU - Alboth, Dirk

AU - Lerner, Anat

AU - Shalev, Jonathan

PY - 2002

Y1 - 2002

N2 - A profit-maximizing auctioneer can provide a public good to a group of agents. Each group member has a private value for the good being provided to the group. We investigate an auction mechanism where the auctioneer provides the good to the group only if the sum of their bids exceeds a reserve price declared previously by the auctioneer. For the two-bidder case with private values drawn from a uniform distribution we characterize the continuously differentiable symmetric equilibrium bidding functions for the agents, and we find the optimal reserve price for the auctioneer when such functions are used by the bidders. We also examine another interesting family of equilibrium bidding functions for this case, with a discrete number of possible bids, and show the relation (in the limit) to the differentiable bidding functions.

AB - A profit-maximizing auctioneer can provide a public good to a group of agents. Each group member has a private value for the good being provided to the group. We investigate an auction mechanism where the auctioneer provides the good to the group only if the sum of their bids exceeds a reserve price declared previously by the auctioneer. For the two-bidder case with private values drawn from a uniform distribution we characterize the continuously differentiable symmetric equilibrium bidding functions for the agents, and we find the optimal reserve price for the auctioneer when such functions are used by the bidders. We also examine another interesting family of equilibrium bidding functions for this case, with a discrete number of possible bids, and show the relation (in the limit) to the differentiable bidding functions.

U2 - 10.1111/1097-3923.00081

DO - 10.1111/1097-3923.00081

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SN - 1467-9779

VL - 3

SP - 501

EP - 525

JO - Journal of Public Economic Theory

JF - Journal of Public Economic Theory

IS - 4

ER -