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Managing Strategic Buyers

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  • Johannes H�rner
  • Larry Samuelson
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    Abstract

    We consider the problem of a monopolist who must sell her inventory before some deadline, facing buyers with independent private values. The seller faces a basic trade-off between imperfect price discrimination and maintaining an effective reserve price. When there is only one unit and only a few buyers, the seller essentially posts unacceptable prices up to the very end, at which point prices collapse in a series of jumps to a “reserve price” exceeding marginal cost. When there are many buyers, the seller abandons this reserve price in order to more effectively screen buyers, with prices decreasing continuously over time.

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    File URL: http://www.jstor.org/stable/pdfplus/10.1086/660902
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    File URL: http://www.jstor.org/stable/full/10.1086/660902
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    Bibliographic Info

    Article provided by University of Chicago Press in its journal Journal of Political Economy.

    Volume (Year): 119 (2011)
    Issue (Month): 3 ()
    Pages: 379 - 425

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    Handle: RePEc:ucp:jpolec:doi:10.1086/660902

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    Web page: http://www.journals.uchicago.edu/JPE/

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    Cited by:
    1. Chia-Hui Chen & Junichiro Ishida, 2013. "Auctions Versus Negotiations: The Role of Price Discrimination," ISER Discussion Paper 0873, Institute of Social and Economic Research, Osaka University.
    2. Qingmin Liu & Konrad Mierendorff & Xianwen Shi, 2013. "Auctions with Limited Commitment," Working Papers tecipa-504, University of Toronto, Department of Economics.

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