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 highestwhen 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.
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Volume (Year): 158 (2002) Issue (Month): 4 (December) Pages: 548- Download reference. The following formats are available: HTML
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Find related papers by JEL classification: D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection D44 - Microeconomics - - Market Structure and Pricing - - - Auctions D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
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