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Managing Strategic Buyers

Author

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  • Johannes Horner
  • Larry Samuelson

Abstract

We consider the problem of a monopolist who must sell her inventory before some deadline, facing buyers with independent private values. The seller faces a basic trade-off between imperfect price discrimination and maintaining an effective reserve price. When there is only one unit and only a few buyers, the seller essentially posts unacceptable prices up to the very end, at which point prices collapse in a series of jumps to a "reserve price" exceeding marginal cost. When there are many buyers, the seller abandons this reserve price in order to more effectively screen buyers, with prices decreasing continuously over time.
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Suggested Citation

  • Johannes Horner & Larry Samuelson, 2010. "Managing Strategic Buyers," Levine's Working Paper Archive 661465000000000279, David K. Levine.
  • Handle: RePEc:cla:levarc:661465000000000279
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Chia-Hui Chen & Junichiro Ishida, 2013. "Auctions Versus Negotiations: The Role of Price Discrimination," ISER Discussion Paper 0873, Institute of Social and Economic Research, Osaka University.
    2. Artyom Shneyerov, 2014. "An optimal slow Dutch auction," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 57(3), pages 577-602, November.
    3. Skreta, Vasiliki, 2015. "Optimal auction design under non-commitment," Journal of Economic Theory, Elsevier, vol. 159(PB), pages 854-890.
    4. Chia-Hui Chen & Junichiro Ishida, 2015. "A Tenure-Clock Problem," ISER Discussion Paper 0919, Institute of Social and Economic Research, Osaka University.
    5. Goeree, Jacob K. & Kushnir, Alexey, 2016. "Reduced form implementation for environments with value interdependencies," Games and Economic Behavior, Elsevier, vol. 99(C), pages 250-256.
    6. Arieh Gavious & Ella Segev, 2017. "Price Discrimination Based on Buyers’ Purchase History," Dynamic Games and Applications, Springer, vol. 7(2), pages 229-265, June.
    7. Chia-Hui Chen & Junichiro Ishida, 2017. "Dynamic Performance Evaluation with Deadlines: The Role of Commitment," ISER Discussion Paper 1015, Institute of Social and Economic Research, Osaka University.
    8. Gretschko, Vitali & Wambach, Achim, 2017. "Contract (re-)negotiation with private and common values," ZEW Discussion Papers 17-056, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. Qingmin Liu & Konrad Mierendorff & Xianwen Shi, 2013. "Auctions with Limited Commitment," Working Papers tecipa-504, University of Toronto, Department of Economics.

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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