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Reservation Price Announcement in Sealed Bid Auctions: Comment

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  • Schroeter, John R.

Abstract

In a 1993 paper in the Journal of Industrial Economics, Carey studies the problem of reservation price announcement in sealed bid procurement auctions. Assuming that the auctioneer/monopsonist has a self-supply option and is motivated by the desire to minimize the expected total cost of procurement, she investigates the auctioneer's decision to announce a reservation price and the level at which it should be set. Carey's analysis includes some errors, however. This comment proposes corrections. I begin by describing the auction setting.

Suggested Citation

  • Schroeter, John R., 1996. "Reservation Price Announcement in Sealed Bid Auctions: Comment," ISU General Staff Papers 199608010700001281, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:199608010700001281
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    References listed on IDEAS

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    1. Riley, John G & Samuelson, William F, 1981. "Optimal Auctions," American Economic Review, American Economic Association, vol. 71(3), pages 381-392, June.
    2. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
    3. Carey, Kathleen, 1993. "Reservation Price Announcements in Sealed Bid Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 41(4), pages 421-429, December.
    4. Maskin, Eric S & Riley, John G, 1984. "Optimal Auctions with Risk Averse Buyers," Econometrica, Econometric Society, vol. 52(6), pages 1473-1518, November.
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