Auctions versus Posted-Price Selling: The Case of Correlated Private Valuations
Two popular selling methods are compared in a one-period correlated private-values model. The seller of an object has to decide whether to sell it by posting a fixed price or by an auction. Without auctioning costs, an auction (with a reserve price) is always preferable. With positive auctioning costs, the authors find that an auction is still preferable when the distribution of buyers' valuations is sufficiently dispersed or when the object value is sufficiently high. The relations between these and previous results are also discussed.
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Volume (Year): 31 (1998)
Issue (Month): 2 (May)
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