Auction Platform Design and the Linkage Principle

Wataru Tamura
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Wataru Tamura: The University of Tokyo

No CARF-F-330, CARF F-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo

Abstract: This paper examines an auction platform in which the platform provider maximizes profits by adjusting participation fees and by choosing an auction format. The seller has private information on the quality of the good, and each participating buyer receives a private signal about his valuation of the good. The choice of auction format determines the allocation of trading surplus among participating seller and buyers. This paper shows that when the seller’s type is affiliated with buyers’ signals, the platform provider can charge higher participation fees to both sides by choosing a first-price auction rather than a second-price or English auction. It also examines the effect of allowing participating buyers to acquire information on the seller’s type and shows that the provider can charge higher participation fees under a non-transparency policy.

Pages: 22 pages
Date: 2013-10
New Economics Papers: this item is included in nep-cta and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:cfi:fseres:cf330

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