Endogenous Asymmetry in Sequential Auctions

Mauricio Bugarin () and Wilfredo Maldonado ()

No 2024_21, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: This paper proposes an innovative methodology for sequential auctions of homogeneous goods that creates asymmetry among participants, thereby achieving higher revenue for the auctioneer. The asymmetry arises endogenously from a competitive advantage in the second auction granted to the winner of the first auction. The analysis shows that the auctioneer's expected revenue in this scenario is higher than in auctions without a competitive advantage and approaches the expected revenue of an optimal reserve price auction. After analyzing the benefits and drawbacks of the competitive advantage mechanism, this paper concludes that it represents a more effective auction design than conventional approaches.

Keywords: Sequential auctions; Endogenous asymmetry; Strategic advantage (search for similar items in EconPapers)
JEL-codes: D44 D47 (search for similar items in EconPapers)
Date: 2024-07-01
New Economics Papers: this item is included in nep-des and nep-gth
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