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On the Comparative Statics of the Optimal Reserve Price : A Comment on "Reserve price Signaling"

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  • Laurent Lamy

    (Crest)

Abstract

This comment finds an error in Cai, Riley and Ye [2] in presenceof informational externalities between bidders, the correction of whichgives a broader view on their comparative statics results with respectto n, the number of bidders. A linear specification of the informationalexternalities between bidders is analyzed. In contrast to their claim,the reserve price of the lowest type sellers is shown to be decreasing inn. We establish that the participation threshold is still increasing in nfor high type sellers confirming their main insight. Nevertheless, it isthe opposite comparative statics that holds for the reserve price.

Suggested Citation

  • Laurent Lamy, 2007. "On the Comparative Statics of the Optimal Reserve Price : A Comment on "Reserve price Signaling"," Working Papers 2007-23, Center for Research in Economics and Statistics.
  • Handle: RePEc:crs:wpaper:2007-23
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    References listed on IDEAS

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    1. Daniel P. O'Brien & Greg Shaffer, 1992. "Vertical Control with Bilateral Contracts," RAND Journal of Economics, The RAND Corporation, pages 299-308.
    2. Sofia Berto Villas-Boas, 2007. "Vertical Relationships between Manufacturers and Retailers: Inference with Limited Data," Review of Economic Studies, Oxford University Press, pages 625-652.
    3. Catherine C. de Fontenay & Joshua S. Gans, 2005. "Vertical Integration in the Presence of Upstream Competition," RAND Journal of Economics, The RAND Corporation, pages 544-572.
    4. Allain Marie-Laure & Chambolle Claire, 2005. "Loss-Leaders Banning Laws as Vertical Restraints," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(1), pages 1-25, February.
    5. Céline Bonnet & Pierre Dubois, 2010. "Inference on vertical contracts between manufacturers and retailers allowing for nonlinear pricing and resale price maintenance," RAND Journal of Economics, RAND Corporation, pages 139-164.
    6. Vanessa von Schlippenbach, 2008. "Complementarities, Below-Cost Pricing, and Welfare Losses," Discussion Papers of DIW Berlin 788, DIW Berlin, German Institute for Economic Research.
    7. Greg Shaffer, 1991. "Slotting Allowances and Resale Price Maintenance: A Comparison of Facilitating Practices," RAND Journal of Economics, The RAND Corporation, pages 120-135.
    8. French, Kenneth R. & Poterba, James M., 1991. "Were Japanese stock prices too high?," Journal of Financial Economics, Elsevier, pages 337-363.
    9. Rod Anderson & Ronald Johnson, 1999. "Antitrust and Sales-Below-Cost Laws: The Case of Retail Gasoline," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(3), pages 189-204, May.
    10. McAfee, R Preston & Schwartz, Marius, 1994. "Opportunism in Multilateral Vertical Contracting: Nondiscrimination, Exclusivity, and Uniformity," American Economic Review, American Economic Association, vol. 84(1), pages 210-230, March.
    11. Paul W. Dobson & Michael Waterson, 1996. "Product Range and Interfirm Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 5(3), pages 317-341, September.
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