Sequential auctions with imperfect quantity commitment |
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| Authors: | Gustavo E Rodriguez |
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| Institution: | (1) University of Texas at Dallas, Richardson, TX, USA;(2) University of Alberta, Edmonton, AB, Canada;(3) Georgia State University, Atlanta, GA, USA;(4) New York University, New York, NY, USA;(5) University of Maryland, College Park, MD, USA;(6) Emory University, Atlanta, GA, USA;(7) Cornell University, Ithaca, NY, USA;(8) Pennsylvania State University, State College, PA, USA;; |
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| Abstract: | This paper studies sequential second price auctions with imperfect quantity commitment in environments involving single-unit
demands, independent private values, and non-decreasing marginal costs. The paper characterizes the symmetric equilibrium
strategy and demonstrates that the equilibrium price sequence is conditionally non-increasing, showing a downwards drift in
cases in which the marginal cost exceeds the reserve price with positive probability. The paper also argues that unlike a
strong seller who sets reserve prices strictly above marginal costs, a weak seller will typically prefer to commit to such inefficiently low reserve prices. |
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