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Selling Goods of Unknown Quality: Forward Versus Spot Auctions


Isa Emin Hafalir


Carnegie Mellon University - David A. Tepper School of Business

Hadi Yektas


affiliation not provided to SSRN
January 7, 2010


Abstract:     
We consider an environment where the sale can take place so early that both the seller and the potential buyers have the same uncertainty about the quality of the good. We present a simple model that allows the seller to put the good for sale before or after this uncertainty is resolved, namely via forward auction or spot auction, respectively. We solve for the equilibrium of these two auctions and then compare the resulting revenues. We also consider the revenue implications of the insurance in forward auctions.

Number of Pages in PDF File: 13

Keywords: Forward Trading, Forward Auctions, Spot Auctions

JEL Classification: D44

working papers series


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Date posted: January 11, 2010  

Suggested Citation

Hafalir, Isa Emin and Yektas, Hadi, Selling Goods of Unknown Quality: Forward Versus Spot Auctions (January 7, 2010). Available at SSRN: http://ssrn.com/abstract=1533005 or http://dx.doi.org/10.2139/ssrn.1533005

Contact Information

Isa Emin Hafalir (Contact Author)
Carnegie Mellon University - David A. Tepper School of Business ( email )
5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
Hadi Yektas
affiliation not provided to SSRN
No Address Available
Feedback to SSRN (Beta)


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References:  8

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