Seller competition by mechanism design

Damian Damianov

Economic Theory, 2012, vol. 51, issue 1, 105-137

Abstract: This paper analyzes a market game in which sellers offer trading mechanisms to buyers and buyers decide which seller to go to depending on the trading mechanisms offered. In a (subgame perfect) equilibrium of this market, sellers hold auctions with an efficient reserve price but charge an entry fee. The entry fee depends on the number of buyers and sellers, the distribution of buyer valuations, and the buyer cost of entering the market. As the size of the market increases, the entry fee decreases and converges to zero in the limit. We study how the surplus of buyers and sellers depends on the number of agents on each side of the market in this decentralized trading environment. Copyright Springer-Verlag 2012

Keywords: Seller competition; Endogenous entry; Auctions; D44; D82 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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Working Paper: Seller Competition by Mechanism Design (2008)
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DOI: 10.1007/s00199-010-0597-z

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