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Different Number of Bidders in Sequential Auctions

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  • Meng, Xin
  • Gunay, Hikmet

Abstract

We analyze the correct selling order in a second-price sequential auction for two heterogeneous synergistic goods with local and global bidders. We prove that as the number of local bidders in the second auction approaches infinity, the outcome is always efficient. However, as the number of local bidders in the first auction approaches infinity, the outcome is inefficient with a positive probability. By using simulations, we show that selling the good with more finite bidders in the second auction results in a more efficient outcome. If the selling order is incorrect, the probabilityof an inefficient outcome is around 19%.

Suggested Citation

  • Meng, Xin & Gunay, Hikmet, 2022. "Different Number of Bidders in Sequential Auctions," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 63(1), pages 72-85, June.
    • Handle: RePEc:hit:hitjec:v:63:y:2022:i:1:p:72-85
    DOI: 10.15057/hje.2022004
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    References listed on IDEAS

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    1. Flavio Menezes & Paulo Monteiro, 2003. "Synergies and price trends in sequential auctions," Review of Economic Design, Springer;Society for Economic Design, vol. 8(1), pages 85-98, August.
    2. Dakshina G. De Silva, 2005. "Synergies in Recurring Procurement Auctions: An Empirical Investigation," Economic Inquiry, Western Economic Association International, vol. 43(1), pages 55-66, January.
    3. GUNAY, Hikmet & MENG, Xin, 2017. "Which good to sell first in a sequential auction?," Discussion paper series HIAS-E-45, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    4. Meng, Xin & Gunay, Hikmet, 2017. "Exposure problem in multi-unit auctions," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 165-187.
    5. Wedad Elmaghraby, 2003. "The Importance of Ordering in Sequential Auctions," Management Science, INFORMS, vol. 49(5), pages 673-682, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Sequential auctions; efficiency; global bidder;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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