Victor Ginsburgh (How to Win Twice at an Auction. On the Incidence of Commissions in Auction Markets) Patrick Legros (ECARES, Université Libre de Bruxelles and CEPR) Nicolas Sahuguet (ECARES, Université Libre de Bruxelles)
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We analyze the welfare consequences of an increase in the commissions charged by the organizer of an auction. Commissions are similar to taxes imposed on buyers and sellers and the economic problem that results looks similar to the question of tax incidence in consumer economics. We argue, however, that auction markets deserve a separate treatment. Indeed we show that an increase in commissions makes sellers worse off, but some (or all) buyers may gain. The results are therefore strikingly different from the standard result that all consumers lose after a tax or a commission increase. We apply our results to comment on the class action against Christie’s and Sotheby’s and argue that the method used to distribute compensations was misguided.
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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number
2004.146.
References listed on IDEAS 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.:
Burguet, Roberto & Sakovics, Jozsef, 1999.
"Imperfect Competition in Auction Designs,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 231-47, February.
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