A local municipality uses a sealed-bid, first-price auction to sell airport landing rights.

  1. A local municipality uses a sealed-bid, first-price auction to sell airport landing rights. The values placed on the landing rights by five competing air carriers are V1 = $25 million, V2 = $18 million, V3 = $ 22 million, V4 = $26 million, V5 = $14 million. The private valuations of industry analysts are independent, random, and uniformly distributed between L = $12 million and H = $50 million. Air carrier 3’s optimal strategy is to bid:
  2. $23.2 million.
  3. $13.6 million.
  4. $16.8 million.
  5. $22.4 million.
  6. $20.0 million.