This paper examines the effect of bid regulations on the range of potential equilibrium prices in a multi-unit uniform price auction with heterogenous bidders. General bid caps destroy equilibria with prices above the bid cap and create new equilibria with prices way below the cap. A cap only for larger rms does not guarantee market prices below that cap. A suffciently high bid floor only for smaller firms destroys some or all pure strategy equilibria despite their prices being above the bid floor. With a general bid floor this happens only with considerably higher bid floors.
|Copenhagen Business School, CBS
|Udgivet - 2016
|Working Paper / Department of Economics. Copenhagen Business School