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http://dx.doi.org/10.15207/JKCS.2019.10.1.205

An Equilibrium Analysis of the Constrained Mean-Price Sealed Bid Auction  

Seo, Yong-Mo (Dept. of Humanities and Social Science, U1 University)
Rhee, Byungchae (Dept. of Economics, Chungnam National University)
Publication Information
Journal of the Korea Convergence Society / v.10, no.1, 2019 , pp. 205-214 More about this Journal
Abstract
In Korea, the first-price sealed bid auction and the constrained mean-price sealed bid auction(buchal-je in Korean) have been used alternatively as procurement auctions. In this paper, we characterize the constrained mean-price sealed bid auction in the context of mechanism design. We consider the general ?-bidder case in which each bidder has private information. Under the assumptions of uniformly distributed valuations and linear strategies, we derive the equilibrium of the constrained mean-price sealed bid auction. Furthermore, we analyze the efficiency and the expected revenue of this auction mechanism in comparison with the first-price sealed bid auction. Finally, we conclude with the critical remarks on the practical intention of the government which uses this auction.
Keywords
constrained mean-price sealed bid; first-price sealed bid auction; efficiency; revenue equivalence theorem;
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