Working Paper No. 814

Mixed Strategies in Discriminatory Divisible-good Auctions

Published: November 24, 2009, revised April 2010Pages: 71Keywords: Pay-as-bid Auction; Divisible Good Auction; Mixed Strategy Equilibria; Wholesale Electricity MarketsJEL-codes: D43; D44; C72
Published version

Mixed Strategies in Discriminatory Divisible-good Auctions Edward J. Anderson, Pär Holmberg and Andrew B. Philpott

Using the concept of market-distribution functions, we derive general optimality conditions for discriminatory divisible-good auctions, which are also applicable to Bertrand games and non-linear pricing. We introduce the concept of o¤er distribution function to analyze randomized offer curves, and characterize mixed-strategy Nash equilibria for pay-as-bid auctions where demand is uncertain and costs are common knowledge; a setting for which pure-strategy supply function equilibria typically do not exist. We generalize previous results on mixtures over horizontal offers as in Bertrand-Edgeworth games, and we also characterize novel mixtures over partly increasing supply functions.

Pär Holmberg


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Sick of Inequality?

An Introduction to the Relationship between Inequality and Health

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In this book Andreas Bergh, Therese Nilsson, IFN and Lund University, and Daniel Waldenström, IFN and Paris School of Economics, France, review the latest research on the relationship between inequality and health. What does inequality mean for our health? Does increasing income inequality affect outcomes such as obesity, life expectancy and subjective well-being?


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