This paper analyzes efficiency in a uniform-price multi-unit auction with a positive reservation price. I demonstrate that the reservation price is an important policy tool that may increase efficiency (or welfare) in multi-unit uniform-price auctions. I show that the higher the reservation price is, the higher is the seller's revenue and the higher is the efficiency of a final allocation of units that could be attained in a multi-unit uniform-price auction. The reservation price increases the bidder's equilibrium strategy in a specific way that is inherent to the uniform-price auction. Thus the reservation price effect on efficiency is in contrast to other auction formats; e.g., the reservation price decreases efficiency in the Vickrey auction and single-unit auctions with symmetric bidders. Therefore the main result can be added to the list of results from mechanism design and auction theory that fail to extend the single-unit/single-dimensional context to the multi-unit/multi-dimensional one. © 2013 The Author.
Bresky, M. (2013). Revenue and efficiency in multi-unit uniform-price auctions. Games and Economic Behavior, 82, 205–217. https://doi.org/10.1016/j.geb.2013.05.007