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Note on "Guarantees in Auctions: The Auction House as Negotiator and Managerial Decision Maker"

Author

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  • Eric A. Greenleaf

    (Stern School of Business, New York University, New York, New York 10012)

  • Jun. Ma

    (Institute of Systems Science, Academy of Mathematics and Systems Sciences, Chinese Academy of Sciences, Beijing 100083, P.R. China)

  • Wanhua. Qiu

    (School of Management, Beijing University of Aeronautics and Astronautics, Beijing 100083, P.R. China)

  • Ambar G. Rao

    (Olin School of Business, Washington University, St. Louis, Missouri 63130)

  • Atanu R. Sinha

    (Leeds School of Business University of Colorado, Boulder, Colorado 80309)

Abstract

In this note, we identify two errors in Greenleaf, Rao, and Sinha's (1993) analysis of negotiation of guarantees in auctions. This note provides a high-level but self-contained summary of the revised results. We find that, in contrast with the earlier claim, guaranteed auctions lead to greater total expected revenue than conventional auctions. The ability to bargain over guarantee values and commissions certainly benefits sellers but may hurt the profits of auction houses. We relate these results to recent events in auction markets.

Suggested Citation

  • Eric A. Greenleaf & Jun. Ma & Wanhua. Qiu & Ambar G. Rao & Atanu R. Sinha, 2002. "Note on "Guarantees in Auctions: The Auction House as Negotiator and Managerial Decision Maker"," Management Science, INFORMS, vol. 48(12), pages 1640-1644, December.
    • Handle: RePEc:inm:ormnsc:v:48:y:2002:i:12:p:1640-1644
    DOI: 10.1287/mnsc.48.12.1640.441
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    References listed on IDEAS

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    1. Eric A. Greenleaf & Ambar G. Rao & Atanu R. Sinha, 1993. "Guarantees in Auctions: The Auction House as Negotiator and Managerial Decision Maker," Management Science, INFORMS, vol. 39(9), pages 1130-1145, September.
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    Cited by:

    1. Toshihiro Tsuchihashi & Yusuke Zennyo, 2021. "Neutrality of buyer and seller commissions to auction house profit," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 209-218, January.
    2. Ernan Haruvy & Peter Popkowski Leszczyc & Octavian Carare & James Cox & Eric Greenleaf & Wolfgang Jank & Sandy Jap & Young-Hoon Park & Michael Rothkopf, 2008. "Competition between auctions," Marketing Letters, Springer, vol. 19(3), pages 431-448, December.
    3. Martin Spann & Robert Zeithammer & Marco Bertini & Ernan Haruvy & Sandy D. Jap & Oded Koenigsberg & Vincent Mak & Peter Popkowski Leszczyc & Bernd Skiera & Manoj Thomas, 2018. "Beyond Posted Prices: the Past, Present, and Future of Participative Pricing Mechanisms," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 5(1), pages 121-136, March.

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