 How do selling mechanisms affect profits, surplus, capacity and prices with unknown demand?Patrick Hummel Canadian Journal of Economics, 2018, vol. 51, issue 1, 94-126 Abstract: I analyze a model in which a seller wishes to sell multiple homogeneous goods to a large group of buyers with unknown demand. The seller may either sell objects via a posted-price mechanism, a discriminatory-price auction, a uniform-price auction, their open-bid analogs, or a revelation mechanism in which the seller first asks all potential buyers to report their valuations and then sets a reserve price. I show that the revelation mechanism leads to the greatest profits, the auction mechanisms result in identical expected profits and the posted-price mechanism results in the smallest profits. However, the more profitable mechanisms impose stronger informational requirements that may make these mechanisms infeasible in practice, and the posted-price mechanism also results in the greatest total surplus. I also find the seller chooses a lower capacity and reserve price in an auction than in the posted-price mechanism. JEL-codes: D40 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cje:issued:v:51:y:2018:i:1:p:94-126 Ordering information: This journal article can be ordered from Access Statistics for this article Canadian Journal of Economics is currently edited by Zhiqi Chen More articles in Canadian Journal of Economics from Canadian Economics Association Canadian Economics Association Prof. Werrner Antweiler, Treasurer UBC Sauder School of Business 2053 Main Mall Vancouver, BC, V6T 1Z2. Contact information at EDIRC. |
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