Auctions with Downstream Interaction Among Buyers

Philippe Jehiel () and Benny Moldovanu ()

RAND Journal of Economics, 2000, vol. 31, issue 4, 768-791

Abstract: We study an auction whose outcome influences the future interaction among agents. The impact of that interaction on agent i is assumed to be a function of all agents' types (which are private information at the time of the auction). Explicit illustrations treat auctions of patents and takeover contests. We derive equilibria for second-price, sealed-bid auctions in which the seller sometimes keeps the object, and we point out the various effects caused by positive and negative impacts. We also study the effect of reserve prices and entry fees on the seller's revenue and on welfare.

Date: 2000
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Working Paper: Auctions with Downstream Interaction among Buyers (1997)
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