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Competing Auctions with Discrete Valuations

Author

Listed:
  • Benoit Julien

    (University of Miami)

Abstract
This paper considers a situation of two sellers of perfectly substitutable items competing in publicly announced reserve prices to induce potential bidders participation at their auction. After learning their own valuations and upon observing the reserve prices, potential bidders make a participation decision consisting of a unique auction to visit. The participation decision is modelled as a standard Bayesian- Nash game. Once participation decisions are realized, each bidder observes the aggregate number of bidders at the auction, and bidding games unfold. For extreme parameter values of the distribution of potential-bidders' valuation, it is shown that a unique, symmetric, pure-strategy equilibrium in reserve prices exists. For other values however, no equilibrium in pure strategy exists. The results share the non-existence feature of Hotelling location type models. The model also contributes to the recent literature on directed search.

Suggested Citation

  • Benoit Julien, 2002. "Competing Auctions with Discrete Valuations," Microeconomics 0207015, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpmi:0207015
    Note: Type of Document - PDF; prepared on IBM PC - PC-TEX/UNIX Sparc TeX; pages: 46 ; figures: Included
    as

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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mic/papers/0207/0207015.pdf
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    More about this item

    Keywords

    Auctions; Reserve Prices; Competition; Private Information and Directed Search.;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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