Managing Strategic Buyers

Johannes Hörner and Larry Samuelson ()
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Larry Samuelson: Cowles Foundation, Yale University, https://economics.yale.edu/people/faculty/larry-samuelson

No 1684R, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We consider the problem of a monopolist who must sell her inventory before some deadline, facing n buyers with independent private values. The monopolist posts prices but has no commitment power. The seller faces a basic trade-off between imperfect price discrimination and maintaining an effective reserve price. When there is only one unit and only a few buyers, the seller essentially posts unacceptable prices up to the very end, at which point prices collapse in a series of jumps to a "reserve price" that exceeds marginal cost. When there are many buyers, the seller abandons this reserve price in order to more effectively screen buyers. Her optimal policy then replicates a Dutch auction, with prices decreasing continuously over time.

Keywords: Revenue management; Intertemporal price discrimination; Coase conjecture; Perishable goods; Reserve price; Dutch auction (search for similar items in EconPapers)
JEL-codes: C72 D42 D82 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2008-11, Revised 2010-09
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Citations:

Published in Journal of Political Economy (July 2011), 119(2): 379-429

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Related works:
Journal Article: Managing Strategic Buyers (2011)
Working Paper: Managing Strategic Buyers (2011)
Working Paper: Managing Strategic Buyers (2010)
Working Paper: Managing Strategic Buyers (2009)
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