On the incidence of commissions in auction markets

Victor Ginsburgh, Patrick Legros and Nicolas Sahuguet

International Journal of Industrial Organization, 2010, vol. 28, issue 6, 639-644

Abstract: We analyze the welfare consequences of an increase in the commissions charged by intermediaries in auction markets. Commissions are similar to taxes imposed on buyers and sellers, and standard economics suggests that both sellers and buyers are made worse off by the tax. However, we show that when the buyers' participation constraint binds and when sellers set optimal reservation prices, the level of commissions correlates to participation and reservation prices in such a way that participating buyers strictly gain from higher commissions.

Keywords: Auction; Intermediation; Commissions; Welfare (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (9)

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Related works:
Working Paper: On the incidence of commissions in auction markets (2010)
Working Paper: On the incidence of commissions in auction markets (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:28:y:2010:i:6:p:639-644

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