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Selling Goods of Unknown Quality: Forward versus Spot Auctions

Isa Hafalir and Hadi Yektas

No 1091, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: We consider an environment where the sale can take place so early that both the seller and the potential buyers have the same uncertainty about the quality of the good. We present a simple model that allows the seller to put the good for sale before or after this uncertainty is resolved, , namely via forward auction or spot auction, respectively. We solve for the equilibrium of these two auctions and then compare the resulting revenues. We also consider the revenue implications of the insurance in forward auctions.

Keywords: Forward Trading; Forward Auctions; Spot Auctions (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Date: 2010
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Journal Article: Selling goods of unknown quality: forward versus spot auctions (2011) Downloads
Working Paper: Selling Goods of Unknown Quality: Forward versus Spot Auctions (2010) Downloads
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