Auction Platform Design and the Linkage Principle
AbstractThis paper examines an auction platform in which the platform provider maximizes profits by adjusting participation fees and by choosing an auction format. The seller has private information on the quality of the good, and each participating buyer receives a private signal about his valuation of the good. The choice of auction format determines the allocation of trading surplus among participating seller and buyers. This paper shows that when the sellerâ€™s type is affiliated with buyersâ€™ signals, the platform provider can charge higher participation fees to both sides by choosing a first-price auction rather than a second-price or English auction. It also examines the effect of allowing participating buyers to acquire information on the sellerâ€™s type and shows that the provider can charge higher participation fees under a non-transparency policy.
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Bibliographic InfoPaper provided by Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo in its series CARF F-Series with number CARF-F-330.
Length: 22 pages
Date of creation: Oct 2013
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-10-18 (All new papers)
- NEP-CTA-2013-10-18 (Contract Theory & Applications)
- NEP-MIC-2013-10-18 (Microeconomics)
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