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Sequential Auctions with Endogenously Determined Reserve Prices

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  • Rasim Ozcan

    (Boston College)

Abstract

This paper models an auction game in which two identical licenses for participating in an oligopolistic market are sold in a sequential auction. There is no incumbent. The auction for the first license is a standard first-price, sealed-bid type with an exogenously set reserve price, while the second uses the price of the first unit as the reserve price. This auction rule mimics the license auction for the Turkish Global Mobile Telecommunications in 2000. For some parameter values of the model, this auction setup generates less or equal revenue as selling the monopoly right with the second-price, sealed-bid auction. However, for other parameter values, the seller may get higher revenues.

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Bibliographic Info

Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 592.

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Length: 30 pages
Date of creation: 05 Apr 2004
Date of revision:
Handle: RePEc:boc:bocoec:592

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Keywords: Auctions; Sequential First-Price Auctions; Endogenous Reserve Prices;

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References

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  1. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
  2. von der Fehr, Nils-Henrik Morch, 1994. "Predatory Bidding in Sequential Auctions," Oxford Economic Papers, Oxford University Press, vol. 46(3), pages 345-56, July.
  3. Philippe Jehiel & Benny Moldovanu, 2000. "Auctions with Downstream Interaction Among Buyers," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 768-791, Winter.
  4. Ashenfelter, Orley, 1989. "How Auctions Work for Wine and Art," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 23-36, Summer.
  5. Gerard J. van den Berg & Jan C. van Ours & Menno P. Pradhan, 2001. "The Declining Price Anomaly in Dutch Dutch Rose Auctions," American Economic Review, American Economic Association, vol. 91(4), pages 1055-1062, September.
  6. Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-59, September.
  7. Cristina Mazón & Soledad Núñez, 1999. "On the Optimality of Treasury Bond Auctions: The Spanish Case," Banco de Espa�a Working Papers 9905, Banco de Espa�a.
  8. McAfee, R. Preston & Vincent, Daniel, 1997. "Sequentially Optimal Auctions," Games and Economic Behavior, Elsevier, vol. 18(2), pages 246-276, February.
  9. Gandal, Neil, 1997. "Sequential Auctions of Interdependent Objects: Israeli Cable Television Licenses," Journal of Industrial Economics, Wiley Blackwell, vol. 45(3), pages 227-44, September.
  10. Bernhardt, Dan & Scoones, David, 1993. "A Note on Sequential Auctions," Working Papers 829, California Institute of Technology, Division of the Humanities and Social Sciences.
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Cited by:
  1. Hikmet Gunay & Xin Meng, 2007. "Predatory Bidding in Sequential Auctions," Economics Bulletin, AccessEcon, vol. 4(12), pages 1-5.
  2. repec:ebl:ecbull:v:4:y:2007:i:12:p:1-5 is not listed on IDEAS

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