Auctions Beat Posted Prices in a Small Market - 10.1628/0932456022975259 - Mohr Siebeck
Economics

Benoit Julien, John Kennes, Ian King

Auctions Beat Posted Prices in a Small Market

Volume 158 () / Issue 4, pp. 548-562 (15)

15,00 € including VAT
article PDF
In a model with two buyers and sellers we consider the choice of sales mechanism from three possibilities: posted prices, and auctions with and without reserve prices. With homogenous goods, sellers' expected revenues are highest when both sellers auction with reserve prices – 33% higher than if posting prices and 100% higher than if auctioning without reserve prices. When sellers can choose their mechanism before choosing prices, both sellers auction with a reserve price in the dominant strategy equilibrium. With heterogenous goods, the equilibrium with posted prices is inefficient (MONTGOMERY [1991]) but the equilibria with both types of auctions are efficient.
Authors/Editors

Benoit Julien No current data available.

John Kennes No current data available.

Ian King No current data available.