On Second Price Auctions and Imperfect Competition
14 Pages Posted: 25 Nov 2007
Date Written: April 2008
Consider two sellers each of whom has one unit of an indivisible good and two buyers each of whom is interested in buying one unit. The sellers simultaneously set reserve prices and use second price auctions as rationing device. An equilibrium in pure strategies where each seller has a regular customer is characterized. The result is applied in order to demonstrate that not allowing sellers to use second price auctions may enhance total surplus.
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