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Optimal auctions with externalities and signaling

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Author Info

  • Jozsef Molnar

    ()
    (Department of Economics, Northwestern University)

  • Gabor Virag

    ()
    (Department of Economics, Princeton University)

Abstract

This paper asks how to design a revenue-maximizing auction in the presence of post-auction market competition and asymmetric information. In this situation, bidders, depending on the auction mechanism, can signal their type through their bidding behavior which influences the outcome of the post-auction market game. Thus the auctioneer has to design a mechanism that not only specifies who wins the good but also describes the amount of information that can be revealed about the winer through signaling. This paper shows that to reveal all information about the winner can be optimal under some conditions.

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File URL: http://econ.core.hu/doc/dp/dp/virag16.pdf
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Bibliographic Info

Paper provided by Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences in its series IEHAS Discussion Papers with number 0112.

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Length: 51 pages
Date of creation: 2001
Date of revision:
Handle: RePEc:has:discpr:0112

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References

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  1. Heidrun C. Hoppe & Philippe Jehiel & Benny Moldovanu, 2006. "License Auctions and Market Structure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 371-396, 06.
  2. Molnar, Jozsef, 2007. "Pre-emptive horizontal mergers: theory and evidence," Research Discussion Papers 17/2007, Bank of Finland.
  3. Cho, In-Koo & Kreps, David M, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 179-221, May.
  4. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
  5. Maskin, Eric S & Riley, John G, 1984. "Optimal Auctions with Risk Averse Buyers," Econometrica, Econometric Society, vol. 52(6), pages 1473-1518, November.
  6. Jehiel, Phillipe & Moldovanu, Benny, 1998. "Efficient Design with Interdependent Valuations," Sonderforschungsbereich 504 Publications 98-22, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  7. Roger B. Myerson, 1977. "Incentive Compatability and the Bargaining Problem," Discussion Papers 284, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  8. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
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Cited by:
  1. Molnar, Jozsef, 2007. "Pre-emptive horizontal mergers: theory and evidence," Research Discussion Papers 17/2007, Bank of Finland.

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