Optimal revenue-sharing mechanisms with seller commitment to ex-post effort

Xun Chen, Shanmin Li and Dazhong Wang ()
Additional contact information
Xun Chen: Sun Yat-sen University
Shanmin Li: Sun Yat-sen University
Dazhong Wang: Nanjing University

Social Choice and Welfare, 2022, vol. 58, issue 1, No 7, 159 pages

Abstract: Abstract This study considers the characterization and implementation of the optimal revenue-sharing mechanism when the seller’s ex-post effort affects the final outcome. In the optimal revenue-sharing mechanism with the seller’s full commitment to effort exertion, the seller commits to the first-best effort. Under the regularity condition guaranteed by the assumption of log-concave density, the optimal mechanism selects the bidder with the highest type, provided that the associated virtual surplus with the seller’s commitment to the first-best effort is positive. A first-price share auction with an appropriate reserve share and an effort commitment scheme can implement the optimal revenue-sharing mechanism. However, a second-price share auction might fail for implementation, such as in a case with two bidders and a uniform type distribution. Lastly, we introduce a sealed-bid share auction called the first-second price share auction, which can implement the optimal mechanism in dominant strategy.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s00355-021-01351-w Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
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:spr:sochwe:v:58:y:2022:i:1:d:10.1007_s00355-021-01351-w

Ordering information: This journal article can be ordered from
http://www.springer. ... c+theory/journal/355

DOI: 10.1007/s00355-021-01351-w

Access Statistics for this article

Social Choice and Welfare is currently edited by Bhaskar Dutta, Marc Fleurbaey, Elizabeth Maggie Penn and Clemens Puppe

More articles in Social Choice and Welfare from Springer, The Society for Social Choice and Welfare Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().