The Shill Bidding Effect versus the Linkage Principle

Laurent Lamy

Journal of Economic Theory, 2009, vol. 144, issue 1, 390-413

Abstract: The analysis of second price auctions with externalities is utterly modified if the seller is unable to commit not to participate in the mechanism. For the General Symmetric Model introduced by Milgrom and Weber [P. Milgrom, R. Weber, A theory of auctions and competitive bidding, Econometrica 50 (1982) 1089-1122] we characterize the full set of separating equilibria that are symmetric among buyers and with a strategic seller being able to bid in the same way as any buyer through a so-called shill bidding activity. The revenue ranking between first and second price auctions is different from the one arising in Milgrom and Weber: the benefits from the highlighted 'Linkage Principle' are counterbalanced by the 'Shill Bidding Effect.'

Keywords: Auctions; Externalities; Linkage; Principle; Shill; bidding (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022-0531(08)00082-3
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The Shill Bidding Effect versus the Linkage Principle (2009)
Working Paper: The Shill Bidding Effect versus the Linkage Principle (2009)
Working Paper: The 'Shill Bidding Effect' Versus the 'Linkage Principle' (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:144:y:2009:i:1:p:390-413

Access Statistics for this article

Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell

More articles in Journal of Economic Theory from Elsevier
Bibliographic data for series maintained by Catherine Liu ().