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Optimal Price Ceilings in a Common Value Auction

Author

Listed:
  • Archishman Chakraborty

    (Baruch College, City University of New York)

Abstract

A simple common value auction is considered where it is optimal to set a ceiling price in addition to a reserve price. The ceiling price prevents the better informed bidder from outbidding the less informed bidders. This guarantees participation from the less informed bidders raising the seller's revenues. The seller is better off by selling the good in an auction with a price ceiling compared to selling the good at a fixed price.

Suggested Citation

  • Archishman Chakraborty, 2002. "Optimal Price Ceilings in a Common Value Auction," Economics Bulletin, AccessEcon, vol. 3(7), pages 1-7.
    • Handle: RePEc:ebl:ecbull:eb-02c70005
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    File URL: http://www.accessecon.com/pubs/EB/2002/Volume3/EB-02C70005A.pdf
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    Citations

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    Cited by:

    1. Xinyan Shi, 2013. "Common-value auctions with asymmetrically informed bidders and reserve price," International Journal of Economic Theory, The International Society for Economic Theory, vol. 9(2), pages 161-175, June.
    2. repec:dau:papers:123456789/4073 is not listed on IDEAS
    3. Nicolas Sahuguet, 2006. "Caps in asymmetric all-pay auctions with incomplete information," Economics Bulletin, AccessEcon, vol. 3(9), pages 1-8.

    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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