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Coasian dynamics in repeated English auctions

Author

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  • Flávio Menezes

    ()

  • Matthew Ryan

    ()

Abstract

We extend the Coase conjecture to the case of a seller with a single object, who faces n potential buyers and holds a sequence of English auctions until the object is sold. In an independent-private-values environment in which buyers and sellers share the same discount factor, we show that the (perfect Bayesian) equilibrium path of reserve prices obeys a Coasian logic. Moreover, the equilibrium reserve path lies below that for the model of repeated sealed-bid, second-price auctions studied by McAfee and Vincent (1997). Nevertheless, the open (English) and sealed-bid formats are shown to be revenue equivalent.
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Suggested Citation

  • Flávio Menezes & Matthew Ryan, 2009. "Coasian dynamics in repeated English auctions," International Journal of Game Theory, Springer;Game Theory Society, vol. 38(3), pages 349-366, November.
  • Handle: RePEc:spr:jogath:v:38:y:2009:i:3:p:349-366
    DOI: 10.1007/s00182-009-0164-7
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    References listed on IDEAS

    as
    1. John G. Riley & Richard Zeckhauser, 1980. "Optimal Selling Strategies:," UCLA Economics Working Papers 180, UCLA Department of Economics.
    2. Simon Grant & Atsushi Kajii & Flavio Menezes & Matthew J. Ryan, 2006. "Auctions with options to re-auction," International Journal of Economic Theory, The International Society for Economic Theory, vol. 2(1), pages 17-39.
    3. McAfee, R. Preston & Vincent, Daniel, 1997. "Sequentially Optimal Auctions," Games and Economic Behavior, Elsevier, vol. 18(2), pages 246-276, February.
    4. Coase, Ronald H, 1972. "Durability and Monopoly," Journal of Law and Economics, University of Chicago Press, vol. 15(1), pages 143-149, April.
    5. Nancy L. Stokey, 1979. "Intertemporal Price Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 355-371.
    6. Drew Fudenberg & David K. Levine & Jean Tirole, 1985. "Infinite-Horizon Models of Bargaining with One-Sided Incomplete Information," Levine's Working Paper Archive 1098, David K. Levine.
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    More about this item

    Keywords

    Dynamic auctions; Coase conjecture; Reserve prices; D44;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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