The Optimal Sequence of Prices and Auctions
DOI:
https://doi.org/10.4108/eai.8-8-2015.2260557Keywords:
dynamic mechanism design, auction versus price, buy-it-nowAbstract
Consider a monopolist seller who must use posted prices and reserve price auctions to sell one unit of an indivisible good while buyers with independent private values arrive over time. Assume an auction costs more to the seller or to the buyers than a posted price. For a wide range of auction cost, the optimal mechanism sequence is a sequence of prices followed by a sequence of auctions. The prices-then-auctions sequence is optimal under various extensions of the basic setting and resembles a buy-it-now selling format on eBay.
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