Auctioning horizontally differentiated items

Sarah Parlane

No 200525, Working Papers from School of Economics, University College Dublin

Abstract: This paper analyses strategic market allocation by two auctioneers holding substitutes. It characterizes both the cooperative and competitive outcomes. Under cooperation or competition with close substitutes, bidders are allocated according to the expected total surplus each generates. This market division is efficient if and only if the distribution of bidders' tastes is not skewed. If skewed, reserve prices distort participation towards the least preferred item. For greater degrees of product differentiation competition leads to multiple equilibria. Finally, competition with close substitutes sellers leave participation rents to their weakest bidder. They do not in other cases, whether they compete or cooperate.

Keywords: Competition; Auctions; Reserve prices; Efficiency; Auctions--Mathematical models; Competition; Pricing (search for similar items in EconPapers)
JEL-codes: D43 D44 D82 (search for similar items in EconPapers)
Date: 2005-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://hdl.handle.net/10197/682 First version, 2005 (application/pdf)

Related works:
Journal Article: Auctioning Horizontally Differentiated Items (2008)
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