[go: up one dir, main page]

IDEAS home Printed from https://ideas.repec.org/a/the/publsh/538.html
   My bibliography  Save this article

Competing auctions: finite markets and convergence

Author

Listed:
  • ,

    (Department of Economics, University of Rochester)

Abstract
The literature on competing auctions offers a model where sellers compete for buyers by setting reserve prices freely. An important outstanding conjecture (e.g. Peters and Severinov (1997)) is that the sellers post prices close to their marginal costs when the market becomes large. This conjecture is confirmed in this paper. More precisely, we show that if all sellers have zero costs, then the equilibrium reserve price converges to 0 in distribution. I also show that if there is a high enough lower bound on the buyers’ valuations, then there is a symmetric pure strategy equilibrium. In this equilibrium, if the number of buyers (sellers) increases, then the equilibrium reserve price increases (decreases) and the reserve price is decreasing in the size of the market.

Suggested Citation

  • ,, 2010. "Competing auctions: finite markets and convergence," Theoretical Economics, Econometric Society, vol. 5(2), May.
  • Handle: RePEc:the:publsh:538
    as

    Download full text from publisher

    File URL: http://econtheory.org/ojs/index.php/te/article/viewFile/20100241/3779/151
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lester, Benjamin & Visschers, Ludo & Wolthoff, Ronald, 2015. "Meeting technologies and optimal trading mechanisms in competitive search markets," Journal of Economic Theory, Elsevier, vol. 155(C), pages 1-15.
    2. Cristián Troncoso-Valverde, 2018. "Releasing information in private-value second-price auctions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(3), pages 781-817, May.
    3. Attar, Andrea & Campioni, Eloisa & Piaser, Gwenaël, 2018. "On competing mechanisms under exclusive competition," Games and Economic Behavior, Elsevier, vol. 111(C), pages 1-15.
    4. Han, Seungjin, 2015. "Robust competitive auctions," Economics Letters, Elsevier, vol. 136(C), pages 207-210.
    5. Hafalir, Isa E. & Hakimov, Rustamdjan & Kübler, Dorothea & Kurino, Morimitsu, 2018. "College admissions with entrance exams: Centralized versus decentralized," Journal of Economic Theory, Elsevier, vol. 176(C), pages 886-934.
    6. Virág, Gábor, 2011. "High profit equilibria in directed search models," Games and Economic Behavior, Elsevier, vol. 71(1), pages 224-234, January.
    7. Forand, Jean Guillaume, 2013. "Competing through information provision," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 438-451.
    8. Maslov, Alexander & Schwartz, Jesse A., 2022. "Imperfect competition in online auctions," Journal of Mathematical Economics, Elsevier, vol. 102(C).
    9. Damian Damianov, 2012. "Seller competition by mechanism design," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(1), pages 105-137, September.
    10. Han, Seungjin, 2022. "General competing mechanism games with strategy-proof punishment," Journal of Mathematical Economics, Elsevier, vol. 102(C).
    11. Backus, Matthew R. & Podwol, Joseph Uri & Schneider, Henry S., 2014. "Search costs and equilibrium price dispersion in auction markets," European Economic Review, Elsevier, vol. 71(C), pages 173-192.
    12. Feess, Eberhard & Grund, Christian & Walzl, Markus & Wohlschlegel, Ansgar, 2020. "Competing trade mechanisms and monotone mechanism choice," European Journal of Operational Research, Elsevier, vol. 280(3), pages 1108-1121.
    13. Carvajal, Andrés & Thereze, João, 2023. "Insurance contracts and financial markets," Mathematical Social Sciences, Elsevier, vol. 121(C), pages 8-19.
    14. Burguet, Roberto & Sákovics, József, 2024. "Simultaneous bidding in competing auctions," Economics Letters, Elsevier, vol. 237(C).
    15. Podwol, Joseph Uri & Schneider, Henry S., 2016. "Nonstandard bidder behavior in real-world auctions," European Economic Review, Elsevier, vol. 83(C), pages 198-212.

    More about this item

    Keywords

    Competing auctions; finite markets; convergence;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:the:publsh:538. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Martin J. Osborne (email available below). General contact details of provider: http://econtheory.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.