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Information Provision in Competing Auctions

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  • Cristián Troncoso Valverde

    () (Facultad de Economía y Empresa, Universidad Diego Portales)

Abstract

This paper studies the incentives faced by competing auctioneers who can provide information to prospective bidders about their valuations of the objects for sale. We consider a model in which two sellers running second-price auctions compete to attract potential bidders by releasing information about valuations before bidders select trading partners. Thus, bidders' participation decisions are modeled in ex-post terms which allows us to investigate the effect of information on the composition of the set of types who visit each seller. We derive a set of necessary and su#cient conditions that supports full information provision as the unique equilibrium of the game. This result holds even if the number of bidders is restricted to two, which contrasts with the ndings of models with a single auctioneer where full information provision is never optimal. We also provide a characterization of information in terms of its strategic value to the sellers.

Suggested Citation

  • Cristián Troncoso Valverde, 2011. "Information Provision in Competing Auctions," Working Papers 25, Facultad de Economía y Empresa, Universidad Diego Portales.
  • Handle: RePEc:ptl:wpaper:25
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    File URL: http://www.udp.cl/descargas/facultades_carreras/economia/pdf/documentos_investigacion/wp25_Troncoso.pdf
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    References listed on IDEAS

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    1. Fuente,Angel de la, 2000. "Mathematical Methods and Models for Economists," Cambridge Books, Cambridge University Press, number 9780521585293, March.
    2. Bergemann, Dirk & Pesendorfer, Martin, 2007. "Information structures in optimal auctions," Journal of Economic Theory, Elsevier, vol. 137(1), pages 580-609, November.
    3. 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.
    4. Vagstad, Steinar, 2007. "Should auctioneers supply early information for prospective bidders?," International Journal of Industrial Organization, Elsevier, vol. 25(3), pages 597-614, June.
    5. Burguet, Roberto & Sakovics, Jozsef, 1999. "Imperfect Competition in Auction Designs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 231-247, February.
    6. Forand, Jean Guillaume, 2013. "Competing through information provision," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 438-451.
    7. Simon Board, 2009. "Revealing information in auctions: the allocation effect," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(1), pages 125-135, January.
    8. Juan-José Ganuza, 2004. "Ignorance Promotes Competition: An Auction Model of Endogenous Private Valuations," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 583-598, Autumn.
    9. Green, Jerry & Laffont, Jean-Jacques, 1984. "Participation constraints in the vickrey auction," Economics Letters, Elsevier, vol. 16(1-2), pages 31-36.
    10. Juan-José Ganuza & José S. Penalva Zuasti, 2005. "On Information And Competition In Private Value Auctions," Working Papers wp2005_0503, CEMFI.
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    Cited by:

    1. Wataru Tamura, 2013. "Auction Platform Design and the Linkage Principle," CARF F-Series CARF-F-330, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    2. Forand, Jean Guillaume, 2013. "Competing through information provision," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 438-451.
    3. Wataru Tamura, 2016. "Auction Platform Design and the Linkage Principle," Journal of Industrial Economics, Wiley Blackwell, vol. 64(2), pages 201-225, June.

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