Competing trade mechanisms and monotone mechanism choice

Eberhard Feess (), Christian Grund, Markus Walzl and Ansgar Wohlschlegel

European Journal of Operational Research, 2020, vol. 280, issue 3, 1108-1121

Abstract: We investigate the choice between posted prices and auctions of competing sellers with private valuations. Assuming that buyers face higher hassle costs in auctions, we show the existence of monotone pure strategy equilibria where sellers offer posted prices rather than auctions if and only if they have a sufficiently high reservation value. Posted prices sell with lower probability but yield a larger revenue in case of trade. Using an empirical strategy to compare revenues of posted prices and auctions that takes selling probabilities explicitly into account, we find our theoretical predictions supported by data from eBay auctions on ticket sales for the EURO 2008 European Football Championship.

Keywords: Auctions/bidding; Competing sellers; Single-crossing; Posted prices, (search for similar items in EconPapers)
Date: 2020
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Working Paper: Competing Trade Mechanisms and Monotone Mechanism Choice (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:280:y:2020:i:3:p:1108-1121

DOI: 10.1016/j.ejor.2019.08.013

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