Advanced Search
MyIDEAS: Login to save this article or follow this journal

Competing auctions with endogenous quantities

Contents:

Author Info

  • Moldovanu, Benny
  • Sela, Aner
  • Shi, Xianwen

Abstract

Two sellers decide on their discrete supply of a homogenous good. There is a finite number of buyers with unit demand and privately known valuations. In the first model, there is a centralized market place where a uniform auction takes place. In the second, there are two distinct auction sites, each with one seller, and buyers decide where to bid. Using the theory of potential games, we show that in the one-site auction model there is always an equilibrium in pure-strategies. In contrast, if the distribution of buyers values has an increasing failure rate, and if the marginal cost of production is relatively low, there is no pure-strategy equilibrium where both sellers make positive profits in the competing sites model. We also identify conditions under which an equilibrium with a unique active site exists. We deal with the finite and discrete models by using several results about order statistics developed by Richard Barlow and Frank Proschan [R. Barlow, F. Proschan, Mathematical Theory of Reliability, Wiley, New York, 1965; R. Barlow, F. Proschan, Inequalities for linear combinations of order statistics from restricted families, Ann. Math. Statist. 37 (1966) 1593-1601; R. Barlow, F. Proschan, Statistical Theory of Reliability and Life Testing, McArdle Press, Silver Spring, 1975].

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/B6WJ3-4PTW53M-1/1/0a45ec3bd7197b25071d75b72dbf6a63
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 141 (2008)
Issue (Month): 1 (July)
Pages: 1-27

as in new window
Handle: RePEc:eee:jetheo:v:141:y:2008:i:1:p:1-27

Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/622869

Related research

Keywords:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Yvan Lengwiler, 1999. "The multiple unit auction with variable supply," Economic Theory, Springer, vol. 14(2), pages 373-392.
  2. Glenn Ellison & Drew Fudenberg, 2003. "Knife-Edge or Plateau: When do Market Models Tip?," Levine's Working Paper Archive 506439000000000098, David K. Levine.
  3. Carl Davidson & Raymond Deneckere, 1986. "Long-Run Competition in Capacity, Short-Run Competition in Price, and the Cournot Model," RAND Journal of Economics, The RAND Corporation, vol. 17(3), pages 404-415, Autumn.
  4. Michael Peters & Sergei Severinov, 2001. "Internet Auctions with Many Traders," Working Papers peters-01-01, University of Toronto, Department of Economics.
  5. Dov Monderer & Moshe Tennenholtz, 2004. "K-price auctions: Revenue inequalities, utility equivalence, and competition in auction design," Economic Theory, Springer, vol. 24(2), pages 255-270, August.
  6. Marco LiCalzi & Alessandro Pavan, 2002. "Tilting the Supply Schedule to Enhance Competition in Uniform- Price Auctions," Game Theory and Information 0210003, EconWPA.
  7. Glenn Ellison & Drew Fudenberg & Markus Mobius, 2010. "Competing Auctions," Levine's Working Paper Archive 506439000000000092, David K. Levine.
  8. Bulow, Jeremy & Klemperer, Paul, 1996. "Auctions versus Negotiations," American Economic Review, American Economic Association, vol. 86(1), pages 180-94, March.
  9. Benny Moldovanu & Aner Sela & Xianwen Shi, 2007. "Contests for Status," Journal of Political Economy, University of Chicago Press, vol. 115, pages 338-363.
  10. Robert M. Anderson & Glenn Ellison & Drew Fudenberg, 2005. "Location Choice in Two-Sided Markets with Indivisible Agents," Harvard Institute of Economic Research Working Papers 2056, Harvard - Institute of Economic Research.
  11. Klemperer, Paul, 1987. "Markets with Consumer Switching Costs," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 375-94, May.
  12. MINGLI ZHENG & Robert McMillan & SAJID ANWAR, 2005. "Bidding Behavior in Competing Auctions: Evidence from eBay," Microeconomics 0505001, EconWPA.
  13. Michael Peters & Sergei Severinov, 1995. "Competition Among Sellers who offer Auctions Instead of Prices," Working Papers peters-95-02, University of Toronto, Department of Economics.
  14. Burguet, Roberto & Sakovics, Jozsef, 1999. "Imperfect Competition in Auction Designs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 231-47, February.
  15. Robert G. Hansen, 1988. "Auctions with Endogenous Quantity," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 44-58, Spring.
  16. Back, Kerry & Zender, Jaime F., 2001. "Auctions of divisible goods with endogenous supply," Economics Letters, Elsevier, vol. 73(1), pages 29-34, October.
  17. Bulow, Jeremy & Roberts, John, 1989. "The Simple Economics of Optimal Auctions," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1060-90, October.
  18. David M. Kreps & Jose A. Scheinkman, 1983. "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 326-337, Autumn.
  19. Rabah Amir, 2000. "On the Effects of Entry in Cournot Markets," Econometric Society World Congress 2000 Contributed Papers 1475, Econometric Society.
  20. Koutsougeras, Leonidas C., 2003. "Non-Walrasian equilibria and the law of one price," Journal of Economic Theory, Elsevier, vol. 108(1), pages 169-175, January.
  21. Monderer, Dov & Shapley, Lloyd S., 1996. "Potential Games," Games and Economic Behavior, Elsevier, vol. 14(1), pages 124-143, May.
  22. Moreno, Diego & Ubeda, Luis, 2006. "Capacity precommitment and price competition yield the Cournot outcome," Games and Economic Behavior, Elsevier, vol. 56(2), pages 323-332, August.
  23. McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, vol. 61(6), pages 1281-1312, November.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Alexander Matros & Andriy Zapechelnyuk, 2010. "Competition of E-Commerce Intermediaries," Working Papers 675, Queen Mary, University of London, School of Economics and Finance.
  2. Damianov, Damian, 2008. "Seller Competition by Mechanism Design," MPRA Paper 9348, University Library of Munich, Germany.
  3. Andrea Attar & Eloisa Campioni & Gwenael Piaser, 2011. "Competing Mechanisms, Exclusive Clauses and the Revelation Principle," CEIS Research Paper 201, Tor Vergata University, CEIS, revised 30 Jun 2011.
  4. Andersson, T. & Andersson, C. & Andersson, F., 2012. "An empirical investigation of efficiency and price uniformity in competing auctions," Economics Letters, Elsevier, vol. 116(1), pages 99-101.
  5. Andrea Attar & Eloisa Campioni & Gwenaël Piaser, 2014. "Competing Mechanisms Communication under Exclusivity Clauses," Working Papers 2014-048, Department of Research, Ipag Business School.
  6. Szech, Nora, 2011. "Optimal advertising of auctions," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2596-2607.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:141:y:2008:i:1:p:1-27. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.