An Optimal Auction with Identity-Dependent Externalities
AbstractWe analyze the problem of a seller who has multiple units of a good and faces a set of buyers with unit demands, private information, and identity-dependent externalities. We derive the seller's optimal mechanism and characterize its main properties. As an application of the model, we consider the problem of a shopping center's developer who wants to sell its stores to a set of potential firms whose willingness to pay depend on the flow of customers that will visit the mall, which is in turn affected by the composition of the firms that locate in the center. We show that a sequential selling procedure commonly used in practice is an optimal mechanism if externalities are sufficiently large.
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Bibliographic InfoPaper provided by Department of Economics, W. P. Carey School of Business, Arizona State University in its series Working Papers with number 2133477.
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- Jorge Aseff & Hector Chade, 2004. "An optimal auction with identity-dependent externalities," Econometric Society 2004 Latin American Meetings 254, Econometric Society.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-05-14 (All new papers)
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- Nicolas Figueroa & Vasiliki Skreta, 2006.
"The Role of Outside Options in Auction Design,"
321307000000000140, UCLA Department of Economics.
- Nicolás Figueroa & Vasiliki Skreta, 2007. "The Role of Outside Options in Auction Design," Documentos de Trabajo 231, Centro de Economía Aplicada, Universidad de Chile.
- Vasiliki Skreta & Nicolas Figueroa, 2008. "The Role of Outside Options in Auction Design," Working Papers 08-12, New York University, Leonard N. Stern School of Business, Department of Economics.
- Rtischev, Dimitry, 2009. "Licensing of a lower-cost production process to an asymmetric Cournot duopoly," MPRA Paper 23017, University Library of Munich, Germany.
- Nicolás Figueroa & Vasiliki Skreta, 2011. "Optimal allocation mechanisms with single-dimensional private information," Review of Economic Design, Springer, vol. 15(3), pages 213-243, September.
- Chen, Bo & Potipiti, Tanapong, 2010. "Optimal selling mechanisms with countervailing positive externalities and an application to tradable retaliation in the WTO," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 825-843, September.
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