Auctions versus Posted-Price Selling: The Case of Correlated Private Valuations
AbstractTwo popular selling methods are compared in a one-period correlated private-values model. The seller of an object has to decide whether to sell it by posting a fixed price or by an auction. Without auctioning costs, an auction (with a reserve price) is always preferable. With positive auctioning costs, the authors find that an auction is still preferable when the distribution of buyers' valuations is sufficiently dispersed or when the object value is sufficiently high. The relations between these and previous results are also discussed.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 31 (1998)
Issue (Month): 2 (May)
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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
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Find related papers by JEL classification:
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
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- Habib, Michel A. & Ziegler, Alexandre, 2007. "Why government bonds are sold by auction and corporate bonds by posted-price selling," Journal of Financial Intermediation, Elsevier, vol. 16(3), pages 343-367, July.
- Jeremy Bulow & Paul Klemperer, 2007.
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- Bulow, Jeremy I. & Klemperer, Paul D., 2007. "When Are Auctions Best?," Research Papers 1973, Stanford University, Graduate School of Business.
- Bulow, Jeremy I & Klemperer, Paul, 2007. "When are Auctions Best?," CEPR Discussion Papers 6393, C.E.P.R. Discussion Papers.
- Jeremy I. Bulow & Paul D. Klemperer, 2007. "When are Auctions Best?," NBER Working Papers 13268, National Bureau of Economic Research, Inc.
- Jiang, Zhong-Zhong & Fang, Shu-Cherng & Fan, Zhi-Ping & Wang, Dingwei, 2013. "Selecting optimal selling format of a product in B2C online auctions with boundedly rational customers," European Journal of Operational Research, Elsevier, vol. 226(1), pages 139-153.
- Bulow, Jeremy I. & Klemperer, Paul, 2009.
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- Sun, Daewon & Li, Erick & Hayya, Jack C., 2010. "The optimal format to sell a product through the internet: Posted price, auction, and buy-price auction," International Journal of Production Economics, Elsevier, vol. 127(1), pages 147-157, September.
- Alexandre Ziegler & Edward P. Lazear, 2003. "The Dominance of Retail Stores," NBER Working Papers 9795, National Bureau of Economic Research, Inc.
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