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Auctions Versus Posted-Price Selling


  • Ruqu Wang


wo most popular selling methods -- posted-price selling and auctions -- are compared in this paper. We confirm the common belief that auctions are most often used when the distribution of the object's value is widely dispersed. The choice of selling methods usually depends on the costs of displaying, storing and auctioning. In the absence of auctioning costs, auctioning at every instant is optimal. The 'dispersion' of a distribution is then formally defined and developed. Using the definition of dispersion, we prove that auctions becomes preferable when a potential buyer's valuation becomes more dispersed. Finally, the optimization of a social planner is studied and we find that the monopoly seller's price can be higher or lower than that of the social optimum.

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  • Ruqu Wang, 1991. "Auctions Versus Posted-Price Selling," Working Papers 812, Queen's University, Department of Economics.
  • Handle: RePEc:qed:wpaper:812

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    1. William D. Nordhaus & James Tobin, 1973. "Is Growth Obsolete?," NBER Chapters,in: The Measurement of Economic and Social Performance, pages 509-564 National Bureau of Economic Research, Inc.
      • William D. Nordhaus & James Tobin, 1972. "Is Growth Obsolete?," NBER Chapters,in: Economic Research: Retrospect and Prospect, Volume 5, Economic Growth, pages 1-80 National Bureau of Economic Research, Inc.
    2. Rudolf R. Rhomberg, 1964. "A Model of the Canadian Economy Under Fixed and Fluctuating Exchange Rates," Journal of Political Economy, University of Chicago Press, vol. 72, pages 1-1.
    3. Lawrence R. Klein, 1958. "The Measurement of Capacity," Cowles Foundation Discussion Papers 49, Cowles Foundation for Research in Economics, Yale University.
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