In an auction with a buy price, a seller offers bidders the opportunity to forgo competing in an auction by transacting immediately at a pre-specified fixed price. If a seller has aspirations in the form of a reference price that depends upon the auction's reserve price and buy price, she does best to keep her aspirations sufficiently low by designing a no-reserve auction with a buy price low enough that some bidder types would exercise it with positive probability in equilibrium. The seller is indifferent between the auction component of her mechanism being a first- or second-price auction.
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Paper provided by University of Connecticut, Department of Economics in its series Alumni working papers with number
2009-02.
Length: 12 pages Date of creation: Jul 2009 Date of revision: Handle: RePEc:uct:alumni:2009-02
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Find related papers by JEL classification: D44 - Microeconomics - - Market Structure and Pricing - - - Auctions D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Stanley Reynolds & John Wooders, 2009.
"Auctions with a buy price,"
Economic Theory,
Springer, vol. 38(1), pages 9-39, January.
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