Selling Goods of Unknown Quality: Forward versus Spot Auctions

Isa Hafalir and Hadi Yektas

MPRA Paper from University Library of Munich, Germany

Abstract: We consider an environment where the sale can take place so early that both the seller and the potential buyers have the same uncertainty about the quality of the good. We present a simple model that allows the seller to put the good for sale before or after this uncertainty is resolved, , namely via forward auction or spot auction, respectively. We solve for the equilibrium of these two auctions and then compare the resulting revenues. We also consider the revenue implications of the insurance in forward auctions.

Keywords: Forward Trading; Forward Auctions; Spot Auctions (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Date: 2010-01-07
New Economics Papers: this item is included in nep-ind
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Related works:
Journal Article: Selling goods of unknown quality: forward versus spot auctions (2011)
Working Paper: Selling Goods of Unknown Quality: Forward versus Spot Auctions (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:19956

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