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Optimal Fees in Internet Auctions

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  • Alexander Matros

    (University of Pittsburgh)

  • Andriy Zapechelnyuk

    ()
    (Kyiv School of Economics)

Abstract

An auction house runs a second-price auction with a possibility of resale through re-auctions. It collects listing and closing fees from the seller. We find the fees which maximize the revenue of the auction house. In particular, we show that the optimal listing fee is zero. Our findings are consistent with the policies of eBay, Amazon, Yahoo, and other Internet auctions.

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File Function: Revised version, January 2008
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Bibliographic Info

Paper provided by Kyiv School of Economics in its series Discussion Papers with number 3.

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Date of creation: Jan 2008
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Handle: RePEc:kse:dpaper:3

Note: Published in Review of Economic Design, 12, 155-163 (2008)
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Keywords: Internet auctions; auctions with resale; auction house; listing fee; closing fee;

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References

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  1. Reisinger, Markus, 2004. "Two-Sided Markets with Negative Externalities," Discussion Papers in Economics, University of Munich, Department of Economics 478, University of Munich, Department of Economics.
  2. Rod Garratt & Thomas Tröger, 2006. "Speculation in Standard Auctions with Resale," Econometrica, Econometric Society, Econometric Society, vol. 74(3), pages 753-769, 05.
  3. Charles Zhoucheng Zheng, 2002. "Optimal Auction with Resale," Econometrica, Econometric Society, Econometric Society, vol. 70(6), pages 2197-2224, November.
  4. Haile,P.A., 1999. "Auctions with resale," Working papers, Wisconsin Madison - Social Systems 33, Wisconsin Madison - Social Systems.
  5. Roger B. Myerson & Mark A. Satterthwaite, 1981. "Efficient Mechanisms for Bilateral Trading," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 469S, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  6. Haile, Philip A., 2003. "Auctions with private uncertainty and resale opportunities," Journal of Economic Theory, Elsevier, Elsevier, vol. 108(1), pages 72-110, January.
  7. Giacomo Calzolari & Alessandro Pavan, 2005. "Monopoly with Resale," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1405, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  8. Jean-Charles Rochet & Jean Triole, 2002. "Platform Competition in Two Sided Markets," FMG Discussion Papers, Financial Markets Group dp409, Financial Markets Group.
  9. Gupta, Madhurima & Lebrun, Bernard, 1999. "First price auctions with resale," Economics Letters, Elsevier, Elsevier, vol. 64(2), pages 181-185, August.
  10. R. Preston McAfee & Daniel Vincent, 1994. "Sequentially Optimal Auctions," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1104, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  11. Horstmann, Ignatius J & LaCasse, Chantale, 1997. "Secret Reserve Prices in a Bidding Model with a Resale Option," American Economic Review, American Economic Association, American Economic Association, vol. 87(4), pages 663-84, September.
  12. Wilson, Robert B, 1985. "Incentive Efficiency of Double Auctions," Econometrica, Econometric Society, Econometric Society, vol. 53(5), pages 1101-15, September.
  13. Haile, Philip A., 2000. "Partial Pooling at the Reserve Price in Auctions with Resale Opportunities," Games and Economic Behavior, Elsevier, Elsevier, vol. 33(2), pages 231-248, November.
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Citations

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Cited by:
  1. Alexander Matros & Andriy Zapechelnyuk, 2006. "Optimal Mechanisms for an Auction Mediator," Discussion Paper Series, The Center for the Study of Rationality, Hebrew University, Jerusalem dp424, The Center for the Study of Rationality, Hebrew University, Jerusalem.
  2. Alexander Matros & Andriy Zapechelnyuk, 2010. "Competition of E-Commerce Intermediaries," Working Papers, Queen Mary, University of London, School of Economics and Finance 675, Queen Mary, University of London, School of Economics and Finance.
  3. Alexander Matros & Andriy Zapechelnyuk, 2009. "Competing Auction Houses," Discussion Papers, Kyiv School of Economics 17, Kyiv School of Economics, revised Mar 2010.
  4. Loertscher, Simon & Niedermayer, Andras, 2014. "Fee-Setting Mechanisms: On Optimal Pricing by Intermediaries and Indirect Taxation," Working Papers, University of Mannheim, Department of Economics 14-03, University of Mannheim, Department of Economics.

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