Authors
E. Maasland
A.M. Onderstal
Date (dd-mm-yyyy)
2007
Title
Auctions with financial externalities
Journal
Economic Theory
Volume
32
Publication Year
2007
Pages
551-574
Issue number
3
Document type
Article
Faculty
Faculty of Economics and Business (FEB)
Institute
Amsterdam School of Economics Research Institute (ASE-RI)
Abstract
We study auctions with financial externalities, i.e., auctions in which
losers care about how much the winner pays. In the first-price auction, larger financial
externalities result in a lower expected price; in the second-price auction, the
effect is ambiguous. Although the expected price in the second-price auction may
increase if financial externalities increase, the seller is not able to gain more revenue
by guaranteeing the losers a fraction of the auction revenue. With a reserve
price, we find that both auctions may have pooling at the reserve price. This finding
suggests that identical bids need not be a signal of collusion, in contrast to what is
sometimes argued in anti-trust cases.
URL
go to publisher's site
Permalink
https://hdl.handle.net/11245/1.286288