Selling Goods of Unknown Quality: Forward versus Spot Auctions
AbstractWe consider an environment where the sale can take place so early that both the seller and the potential buyers have the same uncertainty about the quality of the good. We present a simple model that allows the seller to put the good for sale before or after this uncertainty is resolved, , namely via forward auction or spot auction, respectively. We solve for the equilibrium of these two auctions and then compare the resulting revenues. We also consider the revenue implications of the insurance in forward auctions.
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Bibliographic InfoPaper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 1091.
Length: 13 pages
Date of creation: 2010
Date of revision:
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More information through EDIRC
Forward Trading; Forward Auctions; Spot Auctions;
Other versions of this item:
- Isa Hafalir & Hadi Yektaş, 2011. "Selling goods of unknown quality: forward versus spot auctions," Review of Economic Design, Springer, vol. 15(3), pages 245-256, September.
- Hafalir, Isa E. & Yektas, Hadi, 2010. "Selling Goods of Unknown Quality: Forward versus Spot Auctions," MPRA Paper 19956, University Library of Munich, Germany.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
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