Research on auctions that involve more than one identical item for sale was,almost non-existing in the 90’s, but has since then been getting increasing attention. External incentives for this research have come from the US spectrum, sales, the European 3G mobile-phone auctions,  and Internet auctions. The policy relevance and the huge amount of money involved in many of them have helped the theory and experimental research advance. But in auctions where values are equal across bidders, common value auctions, that is, when the value depends on some outside parameter, equal to all bidders, the research is still embryonic. This thesis contributes to the topic with three studies. The first uses a Bayesian game to model a simple multi-unit common value auction, the task being to compare equilibrium strategies and the seller’s revenue from three auction formats; the discriminatory, the uniform and the Vickrey auction. The second study conducts an economic laboratory experiment on basis of the first study. The third study comprises an experiment on the multi-unit common value uniform auction and compares the dynamic and the static environments of this format. The most salient result in both experiments is that subjects overbid. They are victims of the winner’s curse and bid above the expected value, thus earning a negative profit. There is some learning, but most bidders continue to earn a negative profit also in later rounds. The competitive effect when participating in an auction seems to be stronger than the rationality concerns. In the first experiment, subjects in the Vickrey auction do somewhat better in small groups than subjects in the other auction types and, in the second experiment, subjects in the dynamic auction format perform much better than subjects in the static auction format; but still, they overbid. Due to this overbidding, the theoretical (but not the behavioral) prediction that the dynamic auction should render more revenue than the static fails inthe second experiment. Nonetheless, the higher revenue of the static auction comes at a cost; half of the auctions yield negative profits to the bidders, and the winner’s curse is more severely widespread in this format. Besides, only a minority of the bidders use the equilibrium bidding strategy.The bottom line is that the choice between the open and sealed-bid formats may be more important than the choice of price mechanism, especially in common value settings.

This dissertation consists of two essays on the topic of bidding in multi-unit common value auction. Essay one examines the role of capacity constraint on the auction results and bidding behavior. We consider a general case where bidders are unconstrained, and a second setting where bidders are capacity constrained. We document downward sloping demand curves for individual bidders. Bidders shade their bids by submitting quantity-price pairs and spreading their bids. The winner's curse is strong in the unconstrained treatment, but we find no evidence of the winner's curse when bidding constraints are imposed. Unconstrained bidders shade bids significantly more and their quantity-weighted prices are much lower than those in the constrained treatment. Interacting with the information structure, the capacity constraint has a significant impact on the auction results including the market clearing price, market efficiency, and the degree of market concentration. We provide evidence that efficient price discovery in multi-unit auctions with diverse information is possible, but careful attention to auction design will make this outcome more likely. Essay two examines how the introduction of a noncompetitive bidding option affects outcomes in a multi-unit uniform-price auction. The experimental design incorporates many of the characteristics of the markets that pertain to the issuance of new equity securities. Important features of the bidding environment include endogenous bidder entry, costly information acquisition, bidders that differ by capacity constraint, and substantial uncertainty with respect to the intrinsic value. We use a standard uniform-price auction as our baseline setting where only competitive bids are accepted. Our results show that introducing the noncompetitive bidding option improves auction performance by increasing revenue and reducing price error. Underpricing is found in both treatments, but is less severe in the presence of the noncompetitive bidding option. The incorporation of this option significantly increases both the small bidder participation rate and allocation, and reduces the incentive for small bidders to free ride by submitting extremely high bids. Under both treatments, information acquisition increases large bidders' profits but proves unprofitable for small bidders, and pricing accuracy is increasing in the rate of information acquisition.

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Research on auctions that involve more than one identical item for sale was,almost non-existing in the 90’s, but has since then been getting increasing attention. External incentives for this research have come from the US spectrum, sales, the European 3G mobile-phone auctions,  and Internet auctions. The policy relevance and the huge amount of money involved in many of them have helped the theory and experimental research advance. But in auctions where values are equal across bidders, common value auctions, that is, when the value depends on some outside parameter, equal to all bidders, the research is still embryonic. This thesis contributes to the topic with three studies. The first uses a Bayesian game to model a simple multi-unit common value auction, the task being to compare equilibrium strategies and the seller’s revenue from three auction formats; the discriminatory, the uniform and the Vickrey auction. The second study conducts an economic laboratory experiment on basis of the first study. The third study comprises an experiment on the multi-unit common value uniform auction and compares the dynamic and the static environments of this format. The most salient result in both experiments is that subjects overbid. They are victims of the winner’s curse and bid above the expected value, thus earning a negative profit. There is some learning, but most bidders continue to earn a negative profit also in later rounds. The competitive effect when participating in an auction seems to be stronger than the rationality concerns. In the first experiment, subjects in the Vickrey auction do somewhat better in small groups than subjects in the other auction types and, in the second experiment, subjects in the dynamic auction format perform much better than subjects in the static auction format; but still, they overbid. Due to this overbidding, the theoretical (but not the behavioral) prediction that the dynamic auction should render more revenue than the static fails inthe second experiment. Nonetheless, the higher revenue of the static auction comes at a cost; half of the auctions yield negative profits to the bidders, and the winner’s curse is more severely widespread in this format. Besides, only a minority of the bidders use the equilibrium bidding strategy.The bottom line is that the choice between the open and sealed-bid formats may be more important than the choice of price mechanism, especially in common value settings.

The first chapter of this thesis gives a detailed picture of commonly used structural estimation techniques for several types of auction models. Next chapters consist of essays in which these techniques are utilized for empirical analysis of auction environments. In the second chapter we discuss the identification and estimation of the distribution of private signals in a common value auction model with an asymmetric information environment. We argue that the private information of the informed bidders are identifiable due to the asymmetric information structure. Then, we propose a two stage estimation method, which follows the identification strategy. We show, with Monte-Carlo experiments, that the estimator performs well. Third chapter studies Outer Continental Shelf drainage auctions, where oil and gas extraction leases are sold. Informational asymmetry across bidders and collusive behavior of informed firms make this environment very unique. We apply the technique proposed in the second chapter to data from the OCS drainage auctions. We estimate the parameters of a structural model and then run counterfactual simulations to see the effects of the informational asymmetry on the government's auction revenue. We find that the probability that information symmetry brings higher revenue to the government increases with the value of the auctioned tract. In the fourth chapter, we make use of the results in the multi-unit auction literature to study the Balancing Energy Services auctions (electricity spot market auctions) in Texas. We estimate the marginal costs of bidders implied by the Bayesian-Nash equilibrium of the multi-unit auction model of the market. We then compare the estimates to the actual marginal cost data. We find that, for the BES auction we study, the three largest bidders, Luminant, NRG and Calpine, have marked-down their bids more than the optimal amount implied by the model for the quantities where they were short of their contractual obligations, while they have put a mark-up larger than the optimal level implied by the model for quantities in excess of their contract obligations. Among the three bidders we studied, Calpine has come closest to bidding its optimal implied by the Bayesian-Nash equilibrium of the multi-unit auction model of the BES market.

Submitted by Antonio Ferreira (primo.ferreira@globo.com) on 2013-08-02T02:04:38Z No. of bitstreams: 1 Marco Regulatório Petróleo_Antonio Ferreira.pdf: 766935 bytes, checksum: 130462476dcbdfbda36ca094c516be06 (MD5) / Approved for entry into archive by Marcia Bacha (marcia.bacha@fgv.br) on 2013-08-15T12:56:46Z (GMT) No. of bitstreams: 1 Marco Regulatório Petróleo_Antonio Ferreira.pdf: 766935 bytes, checksum: 130462476dcbdfbda36ca094c516be06 (MD5) / Made available in DSpace on 2013-08-15T12:56:58Z (GMT). No. of bitstreams: 1 Marco Regulatório Petróleo_Antonio Ferreira.pdf: 766935 bytes, checksum: 130462476dcbdfbda36ca094c516be06 (MD5) Previous issue date: 2013-05-27 / Esta dissertação analisa o marco regulatório brasileiro do petróleo e gás sob a ótica da Teoria Econômica e faz uma comparação entre o regime de concessão, instituído pela Lei 9.478/97, e o de partilha de produção, adotado após a descoberta do Présal através da Lei 12.351/10. As características do modelo de concessão brasileiro são revistas assim como os resultados obtidos no setor de Exploração e Produção ao longo dos últimos quinze anos. O estudo faz uma abordagem sucinta sobre a descoberta do Pré-sal que ocasionou a alteração do marco regulatório pelo governo brasileiro. Os problemas relacionados à incerteza, poder de incentivo dos contratos, assim como as falhas de mercado relacionadas à assimetria de informação, externalidade e especificidade dos ativos são analisados para ambos os regimes. Ao longo do estudo também são abordadas questões de ordem prática como a insegurança jurídica, o papel da agência reguladora e a mudança do perfil das empresas interessadas em investir no país. / This paper analyses the Brazilian Oil & Gas regulatory framework in light of the Economic Theory, making a comparison between the concession regime, implemented in 1997 by the Law 9.478, and the production sharing model, introduced in 2010 by the Law 12.531, after the discovery of the Pre-salt province. The characteristics of the Brazilian concession regime are revisited, as well as the effects of its implementation in the Exploration & Production sector during the last fifteen years. This study makes an overview of the Pre-salt discovery, which triggered the change in regulation by the government. The issues related to uncertainty, contract incentives, and market failures related to asymmetric information, externalities and sunk costs are examined for both regimes. Also, the paper covers practical questions like the legal uncertainty, the role of the regulatory agency and the change in the profile of the companies interested in investing in Brazil.