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Information Provision in Competing Auctions

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  • Cristián Troncoso Valverde

    ()
    (Facultad de Economía y Empresa, Universidad Diego Portales)

Abstract

This paper studies the incentives faced by competing auctioneers who can provide information to prospective bidders about their valuations of the objects for sale. We consider a model in which two sellers running second-price auctions compete to attract potential bidders by releasing information about valuations before bidders select trading partners. Thus, bidders' participation decisions are modeled in ex-post terms which allows us to investigate the effect of information on the composition of the set of types who visit each seller. We derive a set of necessary and su#cient conditions that supports full information provision as the unique equilibrium of the game. This result holds even if the number of bidders is restricted to two, which contrasts with the ndings of models with a single auctioneer where full information provision is never optimal. We also provide a characterization of information in terms of its strategic value to the sellers.

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Bibliographic Info

Paper provided by Facultad de Economía y Empresa, Universidad Diego Portales in its series Working Papers with number 25.

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Date of creation: Jun 2011
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Handle: RePEc:ptl:wpaper:25

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  1. Vagstad, S., 2001. "Should Auctioneers Supply Early Information for Prospective Bidders?," Norway; Department of Economics, University of Bergen, Department of Economics, University of Bergen 0701, Department of Economics, University of Bergen.
  2. 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.
  3. Bergemann, Dirk & Pesendorfer, Martin, 2007. "Information structures in optimal auctions," Journal of Economic Theory, Elsevier, vol. 137(1), pages 580-609, November.
  4. Forand, Jean Guillaume, 2013. "Competing through information provision," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 31(5), pages 438-451.
  5. Juan-Jos� Ganuza, 2004. "Ignorance Promotes Competition: An Auction Model of Endogenous Private Valuations," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 583-598, Autumn.
  6. Tan, Guofu & Yilankaya, Okan, 2004. "Equilibria in Second Price Auctions with Participation Costs," Microeconomics.ca working papers, Vancouver School of Economics tan-04-01-24-10-08-06, Vancouver School of Economics, revised 09 Jun 2006.
  7. Juan-José Ganuza & José S. Penalva Zuasti, 2005. "On Information And Competition In Private Value Auctions," Working Papers, CEMFI wp2005_0503, CEMFI.
  8. Simon Board, 2009. "Revealing information in auctions: the allocation effect," Economic Theory, Springer, Springer, vol. 38(1), pages 125-135, January.
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Cited by:
  1. Jean Guillaume Forand, 2012. "Competing Through Information Provision," Working Papers 1201, University of Waterloo, Department of Economics, revised Apr 2012.

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