James J.D. Wang
Fuqua School of Business, Duke University, Durham, NC 27708
Jaime F. Zender
Eccles School of Business, University of Utah
Abstract
We consider a model of divisible good auctions that allows for different degrees of price discrimination and uncertain noncompetitive demand. Considering demand curves that are continuously differentiable in price, we are able to characterize the set of all possible symmetric Nash equilibria of the auctions for risk neutral bidders. The effect of bidder risk aversion can be considered by restricting to CARA utility and normally distributed asset value. We show that, if the noncompetitive demand is uniformly distributed, the seller's expected revenue is strictly decreasing in the level of discrimination used in the auction's pricing rule. Finally, we illustrate that concentrating on the class of linear equilibria that exists provides questionable conclusions.