Auctions Beat Posted Prices in a Small Market
In a model with two buyers and sellers we consider the choice of sales mechanism from three possibilities: posted prices, and auctions with and without reserve prices. With homogenous goods, sellers´expected revenues are highestwhen both sellers auction with reserve prices 33% higher than if posting prices and 100% higher than if auctioning without reserve prices. When sellers can choose their mechanism before choosing prices, both sellers auction with a reserve price in the dominant strategy equilibrium. With heterogenous goods, the equilibrium with posted prices is inefficient (MONTGOMERY ) but the equilibria with both types of auctions are efficient.
Volume (Year): 158 (2002)
Issue (Month): 4 (December)
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