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How to sell in a sequential auction market

Author

Listed:
  • Hendricks, Ken

    (Department of Economics, University of Wisconsin)

  • Wiseman, Thomas

    (Department of Economics, University of Texas at Austin)

Abstract

We characterize an optimal mechanism for a seller with one unit of a good facing N ≥ 3 buyers and a single competitor who sells another identical unit in a second-price auction. Buyers who do not get the seller's good compete in the competitor's subsequent auction. The mechanism features transfers from buyers with the two highest valuations, allocation to the buyer with the second-highest valuation, and an allocation rule that depends on the two highest valuations. It can be implemented by a modified third-price auction, and it raises significantly more revenue than would a standard second- or first-price auction with a reserve price.

Suggested Citation

  • Hendricks, Ken & Wiseman, Thomas, 2022. "How to sell in a sequential auction market," Theoretical Economics, Econometric Society, vol. 17(4), November.
    • Handle: RePEc:the:publsh:4768
    as

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    References listed on IDEAS

    as
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    4. Aghion, Philippe & Bolton, Patrick, 1987. "Contracts as a Barrier to Entry," American Economic Review, American Economic Association, vol. 77(3), pages 388-401, June.
    5. Gabriel Carroll & Ilya Segal, 2019. "Robustly Optimal Auctions with Unknown Resale Opportunities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(4), pages 1527-1555.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Dynamic auctiions;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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