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Equivalence of Auctions and Posted Prices with Many Sellers in a Location

Author

Listed:
  • Klaus Kultti

    (Department of Economics, University of Helsinki, Finland)

  • Juha Virrankoski

    (Research Unit on Economic Structures and Growth, Department of Economics, University of Helsinki, Finland)

Abstract

We consider an economy with symmetric buyers and symmetric sellers. Sellers are in locations and post prices, and buyers observe the prices and visit one location per period. If there are several sellers in a location, a uniform price is not a Nash equilibrium. We derive a pricing scheme with a non-degenerate distribution of prices that is utilitywise the same as auction.

Suggested Citation

  • Klaus Kultti & Juha Virrankoski, 2004. "Equivalence of Auctions and Posted Prices with Many Sellers in a Location," Finnish Economic Papers, Finnish Economic Association, vol. 17(2), pages 79-89, Autumn.
    • Handle: RePEc:fep:journl:v:17:y:2004:i:2:p:79-89
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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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