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Auctions with Downstream Interaction Among Buyers


  • Philippe Jehiel
  • Benny Moldovanu


We study an auction whose outcome influences the future interaction among agents. The impact of that interaction on agent i is assumed to be a function of all agents' types (which are private information at the time of the auction). Explicit illustrations treat auctions of patents and takeover contests. We derive equilibria for second-price, sealed-bid auctions in which the seller sometimes keeps the object, and we point out the various effects caused by positive and negative impacts. We also study the effect of reserve prices and entry fees on the seller's revenue and on welfare.

Suggested Citation

  • Philippe Jehiel & Benny Moldovanu, 2000. "Auctions with Downstream Interaction Among Buyers," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 768-791, Winter.
  • Handle: RePEc:rje:randje:v:31:y:2000:i:winter:p:768-791

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    References listed on IDEAS

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