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On the incidence of commissions in auction markets

Author

Listed:
  • GINSBURGH, Victor
  • LEGROS, Patrick
  • SAHUGUET, Nicolas

Abstract

We analyze the welfare consequences of an increase in the commissions charged by intermediaries in auction markets. Commissions are similar to taxes imposed on buyers and sellers, and standard economics suggests that both sellers and buyers are made worse off by the tax. However, we show that when the buyers' participation constraint binds and when sellers set optimal reservation prices, the level of commissions correlates to participation and reservation prices in such a way that participating buyers strictly gain from higher commissions.
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Suggested Citation

  • GINSBURGH, Victor & LEGROS, Patrick & SAHUGUET, Nicolas, 2010. "On the incidence of commissions in auction markets," LIDAM Reprints CORE 2253, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2253
    DOI: 10.1016/j.ijindorg.2010.02.014
    Note: In : International Journal of Industrial Organization, 28(6), 639-644, 2010
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    Cited by:

    1. Prieto-Rodriguez, Juan & Vecco, Marilena, 2021. "Reading between the lines in the art market: Lack of transparency and price heterogeneity as an indicator of multiple equilibria," Economic Modelling, Elsevier, vol. 102(C).
    2. Tri Vi Dang & Florian Morath, 2013. "The Taxation of Bilateral Trade with Endogenous Information," Working Papers tax-mpg-rps-2013-07, Max Planck Institute for Tax Law and Public Finance.
    3. Tri Vi Dang & Xiaoxi Liu & Florian Morath, 2022. "Taxation, Information Acquisition, and Trade in Decentralized Markets: Theory and Test," Working Papers 2022-08, Faculty of Economics and Statistics, Universität Innsbruck.
    4. repec:spo:wpecon:info:hdl:2441/5kht5rc22p99sq5tol4efe4ssb is not listed on IDEAS
    5. Marleen Marra, 2024. "Estimating and Auction Platform Game with Two-Sided Entry," Working Papers hal-03393068, HAL.
    6. Marie BLUM, 2021. "Auction hosts: are they really impartial?," Working Papers of LaRGE Research Center 2021-09, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    7. repec:spo:wpmain:info:hdl:2441/5kht5rc22p99sq5tol4efe4ssb is not listed on IDEAS

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