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Internet auctions with a temporary buyout option

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  • Che, Xiaogang

Abstract

In an Internet auction, bidders sequentially decide whether or not to enter, and each bidder has to pay a participation cost. In this paper we model an Internet auction with a temporary buyout option. Our main result shows that under certain condition, offering a temporary buyout price would encourage entry of risk neutral bidders, and hence enable the seller to increase expected payoff.

Suggested Citation

  • Che, Xiaogang, 2009. "Internet auctions with a temporary buyout option," MPRA Paper 18444, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:18444
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    References listed on IDEAS

    as
    1. Stanley Reynolds & John Wooders, 2009. "Auctions with a buy price," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(1), pages 9-39, January.
    2. Tan, Guofu & Yilankaya, Okan, 2006. "Equilibria in second price auctions with participation costs," Journal of Economic Theory, Elsevier, vol. 130(1), pages 205-219, September.
    3. Jeremy Bulow & Paul Klemperer, 2009. "Why Do Sellers (Usually) Prefer Auctions?," American Economic Review, American Economic Association, vol. 99(4), pages 1544-1575, September.
    4. Jeremy Bulow & Paul Klemperer, 2009. "Why Do Sellers (Usually) Prefer Auctions?," American Economic Review, American Economic Association, vol. 99(4), pages 1544-75, September.
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    More about this item

    Keywords

    Internet auction; temporary buyout option;

    JEL classification:

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

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