Sequential auctions with randomly arriving buyers
We analyze a dynamic market in which buyers compete in a sequence of private-value auctions for differentiated goods. New buyers and new objects may arrive at random times. Since objects are imperfect substitutes, buyers' values are not persistent. Instead, each buyer's private value for a new object is a new independent draw from the same distribution. We consider the use of second-price auctions for selling these objects, and show that there exists a unique symmetric Markov equilibrium in this market. In equilibrium, buyers shade their bids down by their continuation value, which is the (endogenous) option value of participating in future auctions. We characterize this option value and show that it depends not only on the number of buyers currently present on the market and the distribution of their values, but also on anticipated market dynamics.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
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.:
- Jehiel, Phillipe & Moldovanu, Benny, 1997.
"Auctions with Downstream Interaction among Buyers,"
Sonderforschungsbereich 504 Publications
97-06, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- Gregory Lewis & Matthew Backus, 2010. "An Estimable Demand System for a Large Auction Platform Market," 2010 Meeting Papers 158, Society for Economic Dynamics.
- Andrzej Skrzypacz & William Fuchs, 2007.
"Bargaining with Arrival of New Traders,"
2007 Meeting Papers
186, Society for Economic Dynamics.
- Mireia Jofre-Bonet & Martin Pesendorfer, 2001.
"Estimation of a Dynamic Auction Game,"
NBER Working Papers
8626, National Bureau of Economic Research, Inc.
- Gianni De Fraja & Jozsef Sakovics, 2004.
"Walras Retrouve: Decentralized Trading Mechanisms and the Competitive Price,"
ESE Discussion Papers
36, Edinburgh School of Economics, University of Edinburgh.
- Gianni De Fraja & Jozsef Sakovics, 2001. "Walras Retrouve: Decentralized Trading Mechanisms and the Competitive Price," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 842-863, August.
- Coles, Melvyn G & Muthoo, Abhinay, 1994.
"Strategic Bargaining and Competitive Bidding in a Dynamic Market Equilibrium,"
CEPR Discussion Papers
938, C.E.P.R. Discussion Papers.
- Coles, Melvyn G & Muthoo, Abhinay, 1998. "Strategic Bargaining and Competitive Bidding in a Dynamic Market Equilibrium," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 235-60, April.
- Sailer, Katharina, 2006.
"Searching the eBay Marketplace,"
Discussion Papers in Economics
1234, University of Munich, Department of Economics.
- Satterthwaite, Mark & Shneyerov, Art, 2004.
"Dynamic Matching,Two-sided Incomplete Information, and Participation Costs: Existence and Convergence to Perfect Competition,"
Microeconomics.ca working papers
shneyerov-04-12-17-02-54-, Vancouver School of Economics, revised 17 Dec 2004.
- Mark Satterthwaite & Artyom Shneyerov, 2007. "Dynamic Matching, Two-Sided Incomplete Information, and Participation Costs: Existence and Convergence to Perfect Competition," Econometrica, Econometric Society, vol. 75(1), pages 155-200, 01.
- Kochar, Subhash C., 1999. "On stochastic orderings between distributions and their sample spacings," Statistics & Probability Letters, Elsevier, vol. 42(4), pages 345-352, May.
- Said, Maher, 2008. "Information Revelation and Random Entry in Sequential Ascending Auctions," MPRA Paper 7160, University Library of Munich, Germany.
- Taylor, Curtis R, 1995. "The Long Side of the Market and the Short End of the Stick: Bargaining Power and Price Formation in Buyers', Sellers', and Balanced Markets," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 837-55, August.
- Wolinsky, Asher, 1988. "Dynamic Markets with Competitive Bidding," Review of Economic Studies, Wiley Blackwell, vol. 55(1), pages 71-84, January.
- Satterthwaite, Mark & Shneyerov, Artyom, 2008. "Convergence to perfect competition of a dynamic matching and bargaining market with two-sided incomplete information and exogenous exit rate," Games and Economic Behavior, Elsevier, vol. 63(2), pages 435-467, July.
- Bartoszewicz, Jaroslaw, 1986. "Dispersive ordering and the total time on test transformation," Statistics & Probability Letters, Elsevier, vol. 4(6), pages 285-288, October.
- Engelbrecht-Wiggans, Richard, 1994. "Sequential auctions of stochastically equivalent objects," Economics Letters, Elsevier, vol. 44(1-2), pages 87-90.
- Roman Inderst, 2008. "Dynamic Bilateral Bargaining under Private Information with a Sequence of Potential Buyers," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 220-236, January.
- Haile, Philip A., 2000. "Partial Pooling at the Reserve Price in Auctions with Resale Opportunities," Games and Economic Behavior, Elsevier, vol. 33(2), pages 231-248, November.
When requesting a correction, please mention this item's handle: RePEc:eee:gamebe:v:73:y:2011:i:1:p:236-243. 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: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.