Revenue Effects of Pricing Rule Changes in Cement Auctions of the Iran Mercantile Exchange

Document Type : Research Paper

Authors

1 Department of Theoretical Economics, Faculty of Economics, University of Tehran, Tehran, Iran.

2 Department of Economics, Faculty of Management and Economics, Sharif University of Technology, Tehran, Iran.

Abstract

In economics, auctions are among the most important methods for resource allocation. If designed appropriately, they can achieve the mechanism designer’s objectives, such as efficiency in the price discovery process or revenue maximization. Currently, the Iran Mercantile Exchange (IME) is one of the country’s most significant commodity trading platforms, utilizing auction mechanisms to allocate goods among buyers. Recently, a simultaneous auction method (a type of sealed-bid auction) has been proposed for the cement sector to replace the open auction. Despite the alteration in the auction framework, its pricing rule remains unchanged and continues to follow a discriminatory pricing rule. The objective of this study is to investigate whether a uniform or a discriminatory pricing rule yields higher revenues for sellers. To examine the effects of changing the auction method, this study employs an agent-based model along with auction data from October 2024. The results indicate that as the demand-to-supply ratio increases, or as competition intensifies within the auction, the revenue generated from the uniform price auction surpasses that of the discriminatory price auction.

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References

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History

  • Receive Date: 03 February 2026
  • Revise Date: 07 June 2026
  • Accept Date: 09 June 2026

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