Competing trade mechanisms and monotone mechanism choice |
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| Institution: | 1. Victoria University of Wellington, PO Box 600, Wellington 6140, New Zealand;2. RWTH Aachen University, Templergraben 64, Aachen 52056, Germany;3. Innsbruck University, Universitätsstr. 15, Innsbruck 6020, Austria;4. University of Portsmouth, Portland Street, Portsmouth PO1 3DE, United Kingdom;1. HEC Liège, Management School of the University of Liège, Liège, Belgium;2. School of Business and Economics, Maastricht University, Maastricht, the Netherlands;1. Department of Economics and Business, University of Catania, Corso Italia, 55, 95129, Catania, Italy;2. Portsmouth Business School, Centre for Operational Research and Logistics (CORL), University of Portsmouth, Portsmouth, United Kingdom;1. Department of Industrial and Systems Engineering, University of Florida, 303 Weil Hall, Gainesville, FL 32611, USA;2. Department of Industrial Engineering and Management Systems, University of Central Florida, 12800 Pegasus Dr., Orlando, FL 32816, USA;3. Department of Industrial Engineering, University of Pittsburgh, 1048 Benedum Hall, Pittsburgh, PA 15261, USA;1. School of Mathematics and Statistics, Zhengzhou University, Zhengzhou, Henan 450001, People’s Republic of China;2. Logistics Research Centre, Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Hong Kong, People’s Republic of China |
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| Abstract: | We investigate the choice between posted prices and auctions of competing sellers with private valuations. Assuming that buyers face higher hassle costs in auctions, we show the existence of monotone pure strategy equilibria where sellers offer posted prices rather than auctions if and only if they have a sufficiently high reservation value. Posted prices sell with lower probability but yield a larger revenue in case of trade. Using an empirical strategy to compare revenues of posted prices and auctions that takes selling probabilities explicitly into account, we find our theoretical predictions supported by data from eBay auctions on ticket sales for the EURO 2008 European Football Championship. |
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