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Optimal fees in internet auctions

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  • Alexander Matros

    ()

  • Andriy Zapechelnyuk

Abstract

An auction house runs a second-price auction with a possibility of resale through re-auctions. It collects listing and closing fees from the seller. We find the fees which maximize the revenue of the auction house. In particular, we show that the optimal listing fee is zero. Our findings are consistent with the policies of eBay, Amazon, Yahoo, and other Internet auctions.

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File URL: http://hdl.handle.net/10.1007/s10058-008-0044-9
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Bibliographic Info

Article provided by Springer in its journal Review of Economic Design.

Volume (Year): 12 (2008)
Issue (Month): 3 (September)
Pages: 155-163

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Handle: RePEc:spr:reecde:v:12:y:2008:i:3:p:155-163

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Related research

Keywords: Internet auctions; Auctions with resale; Auction house; Listing fee; Closing fee; D44; C78; D82;

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References

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  1. Haile,P.A., 1999. "Auctions with resale," Working papers 33, Wisconsin Madison - Social Systems.
  2. R. Preston McAfee & Daniel Vincent, 1994. "Sequentially Optimal Auctions," Discussion Papers 1104, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Horstmann, I.J. & LaCasse, C., 1995. "Secret Reserve Prices in a Bidding Model with a Re-Sale Option," Working Papers 9507e, University of Ottawa, Department of Economics.
  4. Giacomo Calzolari & Alessandro Pavan, 2005. "Monopoly with Resale," Discussion Papers 1405, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Zheng, Charles Zhoucheng, 2002. "Optimal Auction with Resale," Staff General Research Papers 12664, Iowa State University, Department of Economics.
  6. Roger B. Myerson & Mark A. Satterthwaite, 1981. "Efficient Mechanisms for Bilateral Trading," Discussion Papers 469S, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Rochet, Jean-Charles & Tirole, Jean, 2003. "Platform Competition in Two-Sided Markets," IDEI Working Papers 152, Institut d'Économie Industrielle (IDEI), Toulouse.
  8. Haile, Philip A., 2000. "Partial Pooling at the Reserve Price in Auctions with Resale Opportunities," Games and Economic Behavior, Elsevier, vol. 33(2), pages 231-248, November.
  9. Gupta, Madhurima & Lebrun, Bernard, 1999. "First price auctions with resale," Economics Letters, Elsevier, vol. 64(2), pages 181-185, August.
  10. Reisinger, Markus, 2004. "Two-Sided Markets with Negative Externalities," Discussion Papers in Economics 478, University of Munich, Department of Economics.
  11. Garratt, Rod & Tröger, Thomas, 2005. "Speculation in Standard Auctions with Resale," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 42, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  12. Haile, Philip A., 2003. "Auctions with private uncertainty and resale opportunities," Journal of Economic Theory, Elsevier, vol. 108(1), pages 72-110, January.
  13. Wilson, Robert B, 1985. "Incentive Efficiency of Double Auctions," Econometrica, Econometric Society, vol. 53(5), pages 1101-15, September.
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Cited by:
  1. Matros, Alexander & Zapechelnyuk, Andriy, 2011. "Optimal mechanisms for an auction mediator," International Journal of Industrial Organization, Elsevier, vol. 29(4), pages 426-431, July.
  2. Alexander Matros & Andriy Zapechelnyuk, 2010. "Competition of E-Commerce Intermediaries," Working Papers 675, Queen Mary, University of London, School of Economics and Finance.
  3. Alexander Matros & Andriy Zapechelnyuk, 2009. "Competing Auction Houses," Discussion Papers 17, Kyiv School of Economics, revised Mar 2010.
  4. Loertscher, Simon & Niedermayer, Andras, 2014. "Fee-Setting Mechanisms: On Optimal Pricing by Intermediaries and Indirect Taxation," Working Papers 14-03, University of Mannheim, Department of Economics.

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