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An equilibrium analysis of a core-selecting package auction with reserve prices

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  • Ryuji Sano

    (Yokohama National University)

Abstract

This study analyzes the equilibrium of a core-selecting package auction under incomplete information. The ascending proxy auction of Ausubel and Milgrom (Front Theor Econ 1:1–42, 2002) is considered in a stylized environment with two goods, two local bidders, and one global bidder. Local bidders shade bids in the equilibrium because of the free-riding incentive. We examine the effect of reserve prices. We show that a reserve price for individual goods increases the equilibrium local bids, whereas they may be decreased by a reserve price for the package of goods. A flexible non-monotonic reserve price rule can improve allocative efficiency as well as seller revenue in the equilibrium.

Suggested Citation

  • Ryuji Sano, 2018. "An equilibrium analysis of a core-selecting package auction with reserve prices," Review of Economic Design, Springer;Society for Economic Design, vol. 22(3), pages 101-122, December.
    • Handle: RePEc:spr:reecde:v:22:y:2018:i:3:d:10.1007_s10058-018-0212-5
    DOI: 10.1007/s10058-018-0212-5
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    References listed on IDEAS

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    More about this item

    Keywords

    Core-selecting auction; Package auction; Ascending proxy auction; Reserve price;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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