How to Win Twice at an Auction: On the Incidence of Commissions in Auction Markets
AbstractWe analyse the welfare consequences of an increase in the commissions charged by intermediaries in auction markets. We argue that while commissions are similar to taxes imposed on buyers and sellers the question of incidence deserves a new treatment in auction markets. We show that an increase in commissions makes sellers worse off, but buyers may strictly gain. The results are therefore strikingly different from the standard result that all consumers weakly lose after a tax or a commission increase. Our results are useful for evaluating compensation in price fixing conspiracies; in particular they suggest that the method used to distribute compensations in the class action against auction houses Christie’s and Sotheby’s was misguided.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4876.
Date of creation: Jan 2005
Date of revision:
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Other versions of this item:
- Victor Ginsburgh & Patrick Legros & Nicolas Sahuguet, 2004. "How to Win Twice at an Auction. On the Incidence of Commissions in Auction Markets," Working Papers 2004.146, Fondazione Eni Enrico Mattei.
- GINSBURGH, Victor & LEGROS, Patrick & SAHUGUET, Nicolas, 2005. "How to win twice at an auction. On the incidence of commissions in auction markets," CORE Discussion Papers, UniversitÃ© catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2005005, UniversitÃ© catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-06-14 (All new papers)
- NEP-CUL-2005-06-14 (Cultural Economics)
- NEP-FMK-2005-06-14 (Financial Markets)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Orley Ashenfelter & Kathryn Graddy, 2004. "Anatomy of the Rise and Fall of a Price-Fixing Conspiracy: Auctions at Sotheby's and Christie's," NBER Working Papers 10795, National Bureau of Economic Research, Inc.
- Ashenfelter, Orley C & Graddy, Kathryn, 2004. "Anatomy of the Rise and Fall of a Price-Fixing Conspiracy: Auctions at Sotheby's and Christie's," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4662, C.E.P.R. Discussion Papers.
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