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Auction Platform Design and the Linkage Principle

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  • Wataru Tamura

    (The University of Tokyo)

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    Abstract

    This 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 seller’s type is affiliated with buyers’ 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 seller’s type and shows that the provider can charge higher participation fees under a non-transparency policy.

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    File URL: http://www.carf.e.u-tokyo.ac.jp/pdf/workingpaper/fseries/F330.pdf
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    Bibliographic Info

    Paper 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.

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    Length: 22 pages
    Date of creation: Oct 2013
    Date of revision:
    Handle: RePEc:cfi:fseres:cf330

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    References

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    1. Stephan Lauermann & Gábor Virág, 2012. "Auctions in Markets: Common Outside Options and the Continuation Value Effect," American Economic Journal: Microeconomics, American Economic Association, vol. 4(4), pages 107-30, November.
    2. Matros, Alexander & Zapechelnyuk, Andriy, 2011. "Optimal mechanisms for an auction mediator," International Journal of Industrial Organization, Elsevier, vol. 29(4), pages 426-431, July.
    3. Kevin Hasker & Robin Sickles, 2010. "eBay in the Economic Literature: Analysis of an Auction Marketplace," Review of Industrial Organization, Springer, vol. 37(1), pages 3-42, August.
    4. Dirk Bergemann & Martin Pesendorfer, 2001. "Information Structures in Optimal Auctions," Cowles Foundation Discussion Papers 1323, Cowles Foundation for Research in Economics, Yale University.
    5. Alexandre Gaudeul & Bruno Jullien, 2005. "E-commerce, two-sided markets and info-mediation," Industrial Organization 0503014, EconWPA, revised 05 Apr 2005.
    6. Marc Rysman, 2009. "The Economics of Two-Sided Markets," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 125-43, Summer.
    7. E. Glen Weyl, 2010. "A Price Theory of Multi-sided Platforms," American Economic Review, American Economic Association, vol. 100(4), pages 1642-72, September.
    8. Axel Ockenfels & David Reiley & Abdolkarim Sadrieh, 2006. "Online Auctions," NBER Working Papers 12785, National Bureau of Economic Research, Inc.
    9. Jullien, Bruno & Mariotti, Thomas, 2002. "Auction and the Informed Seller Problem," IDEI Working Papers 145, Institut d'Économie Industrielle (IDEI), Toulouse, revised Oct 2004.
    10. repec:rje:randje:v:37:y:2006:3:p:668-691 is not listed on IDEAS
    11. repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
    12. Patrick Bajari & Ali Horta�su, 2004. "Economic Insights from Internet Auctions," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 457-486, June.
    13. Alex Gershkov, 2009. "Optimal auctions and information disclosure," Review of Economic Design, Springer, vol. 13(4), pages 335-344, December.
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