On Second Price Auctions and Imperfect Competition
Posted: 30 Apr 2004
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 the total surplus.
Keywords: Auctions, Duopoly, Selling mechanisms, Private information
JEL Classification: D43, D44, D82
Suggested Citation: Suggested Citation