Equilibrium Selling Mechanisms
We consider the equilibrium choice of selling mechanisms by competing firms. For a model where a number of sellers choose sequentially between any two selling mechanisms, there is a unique (subgame perfect) equilibrium under fairly natural assumptions about the monotonicity and differences of the two mechanisms. All sellers choose the mechanism that has the higher per-seller surplus at a critical mass number of sellers. If a mechanism is efficient or is favored by the buyer in some "strong" sense, it will be selected as the equilibrium mechanism. Otherwise, the less efficient mechanism can emerge in equilibrium, even when the number of sellers is arbitrarily large. An increase in the number of sellers need not increase the buyer's surplus, and can sometimes lead to a less e¡Àcient equilibrium mechanism. When more than two selling mechanisms are available, however, the equilibrium may no long be unique; and there are usually multiple equilibria when sellers choose selling mechanisms simultaneously.
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.:
- J. Riley & E. Maskin, 1981.
"Optimal Auctions with Risk Averse Buyers,"
311, Massachusetts Institute of Technology (MIT), Department of Economics.
- Rosenthal, Robert W, 1980. "A Model in Which an Increase in the Number of Sellers Leads to a Higher Price," Econometrica, Econometric Society, vol. 48(6), pages 1575-79, September.
- Wang, Ruqu, 1995. "Bargaining versus posted-price selling," European Economic Review, Elsevier, vol. 39(9), pages 1747-1764, December.
- McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, vol. 61(6), pages 1281-1312, November.
- Riley, John & Zeckhauser, Richard, 1983. "Optimal Selling Strategies: When to Haggle, When to Hold Firm," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 267-89, May.
- 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.
- Wang, Ruqu, 1993.
"Auctions versus Posted-Price Selling,"
American Economic Review,
American Economic Association, vol. 83(4), pages 838-51, September.
- Birger Wernerfelt, 1994. "Selling Formats for Search Goods," Marketing Science, INFORMS, vol. 13(3), pages 298-309.
- Chen, Yongmin & Wang, Ruqu, 2004. "A model of competing selling mechanisms," Economics Letters, Elsevier, vol. 85(2), pages 151-155, November.
- Miller, Nolan & Piankov, Nikita & Zeckhauser, Richard, 2001. "When to Haggle," Working Paper Series rwp01-025, Harvard University, John F. Kennedy School of Government.
- Peters Michael, 1994. "Equilibrium Mechanisms in a Decentralized Market," Journal of Economic Theory, Elsevier, vol. 64(2), pages 390-423, December.
- Bulow, Jeremy & Klemperer, Paul, 1996. "Auctions versus Negotiations," American Economic Review, American Economic Association, vol. 86(1), pages 180-94, March.
- Camera, G. & Delacroix, A., 2001. "Bargaining or Price Posting?," Purdue University Economics Working Papers 1147, Purdue University, Department of Economics.
- Riley, John G & Samuelson, William F, 1981.
American Economic Review,
American Economic Association, vol. 71(3), pages 381-92, June.
- Lu, Xiaohua & McAfee, R. Preston, 1996. "The Evolutionary Stability of Auctions over Bargaining," Games and Economic Behavior, Elsevier, vol. 15(2), pages 228-254, August.
When requesting a correction, please mention this item's handle: RePEc:cuf:journl:y:2004:v:5:i:2:p:335-355. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qiang Gao)
If references are entirely missing, you can add them using this form.