An extended uniform-price auction mechanism of homogeneous divisible goods: supply optimisation and non-strategic bidding

In an extended uniform-price auction mechanism of homogeneous divisible goods, strategic buyers and non-strategic buyers are allowed to participate in the auction simultaneously, and the optimal supply to strategic buyers is determined by a seller after having observed the bids. For both nonlinear bids and linear bids given by symmetric buyers, pure strategy symmetric Nash equilibriums are analysed, and then the dominant relationship is discussed deeply between the two kinds of equilibrium bids. Some conclusions are drawn about this extended uniform-price auction mechanism, i.e. nonlinear equilibrium bids dominate linear ones, and the supply optimisation can effectively reduce the buyers’ market power and thus eliminate many underpricing equilibriums. Moreover, several suggestions are given on how to choose optimal bidding strategies for buyers and how to design an optimal mechanism for a seller.

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