Three Essays on Sequential Auctions

This dissertation examines the reasons for which a seller may decide to conduct a multi-unit auction sequentially rather than simultaneously. It analyzes the manner in which the information generated during a sequential auction can affect bidding to the seller's benefit and demonstrates the requirement of intertemporal commitment to the auction rules.When the seller cannot commit not to alter the reserve price over time, the bidders are reluctant to reveal their valuations. Therefore, with single-unit demands, a symmetric monotone equilibrium exists only in a sequential Dutch auction. In the earlier rounds of this auction, because of the anticipation of lower reserve prices in the future, some buyers prefer not to submit a bid, although their valuations exceed the requested reserve price. Furthermore, any buyer submitting a bid shades it sharply. Consequently, under imperfect commitment, the optimal sequential auction results in lower expected revenue than its simultaneous counterpart.In the presence of allocative and informational externalities, in particular, in a sale of two oligopoly licenses, a sequential auction succeeds in eliminating some of the payoff uncertainty by allocating the licenses in an ordered manner, according to the bidders' strength. Therefore, the weaker oligopolist can acquire his license at a lower price than the one he would pay in a simultaneous auction. In addition, he can avoid overpaying. Conversely, the stronger oligopolist pays a higher price, so that, when the bidders' production costs are independent, the two auction schemes generate the same expected revenue. Therefore, without affecting the seller's revenue or efficiency objectives, the sequential auction results in a more equal distribution of the wealth generated by the oligopoly.Finally, when the preparation or submission of bids is costly, so that a buyer will not enter the auction unless he expects a substantial gain from it, low prices in the earlier rounds of a sequential sale trigger stronger participation, and, consequently, higher prices in the later rounds. A sequential auction, therefore, may result in higher expected revenue than a simultaneous sale, especially when the number of potential bidders is large, the participation cost small, or the distribution of valuations convex