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 University Library of Munich, Germany in its series MPRA Paper with number 19956.
Date of creation: 07 Jan 2010
Date of revision:
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.
- Isa E. Hafalir & Hadi Yektas, 2010. "Selling Goods of Unknown Quality: Forward versus Spot Auctions," Department of Economics - Working Papers Series 1091, The University of Melbourne.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
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