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Salvaging The Linkage Principle In Private-Value Auction For A Single Object

Author

Listed:
  • Indranil Chakraborty

    (University of Oklahoma)

Abstract

There are a number of examples in the auction literature (Perry and Reny, 1999, and Krishna, 2002) where releasing the seller's private information can lead to a lowering of expected revenue. On the other hand, releasing information always increases welfare. Levin and Smith (1994) point out that when entry is endogenous (and the entry decision is made before one observes one''s signal), revenue and welfare objectives coincide. Therefore, revealing information will always increase revenue when we can use entry fees to capture all bidders'' rents.

Suggested Citation

  • Indranil Chakraborty, 2005. "Salvaging The Linkage Principle In Private-Value Auction For A Single Object," Economics Bulletin, AccessEcon, vol. 4(4), pages 1-5.
    • Handle: RePEc:ebl:ecbull:eb-05d40001
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    Keywords

    Auctions;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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