Selling goods of unknown quality: Forward versus spot auctions

Hafalir, IE; Yektaş, H

Selling goods of unknown quality: Forward versus spot auctions

Hafalir, IE

Yektaş, H

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Publication Type:: Journal Article
Citation:: Review of Economic Design, 2011, 15 (3), pp. 245 - 256
Issue Date:: 2011-09-01

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Field	Value	Language
dc.contributor.author	Hafalir, IE https://orcid.org/0000-0002-6731-2848	en_US
dc.contributor.author	Yektaş, H	en_US
dc.date.issued	2011-09-01	en_US
dc.identifier.citation	Review of Economic Design, 2011, 15 (3), pp. 245 - 256	en_US
dc.identifier.issn	1434-4742	en_US
dc.identifier.uri	http://hdl.handle.net/10453/118259
dc.description.abstract	We consider an environment where the sale can take place so early that both the seller and potential buyers have the same uncertainty about the quality of the good. We present a simple model that allows the seller to offer the good for sale before or after this uncertainty is resolved, namely via forward auction or spot auction, respectively. We solve for the equilibrium of these two auctions and then compare the resulting expected revenues. We also consider the revenue implications of insurance in forward auctions. © 2011 Springer-Verlag.	en_US
dc.relation.ispartof	Review of Economic Design	en_US
dc.relation.isbasedon	10.1007/s10058-011-0110-6	en_US
dc.subject.classification	Economic Theory	en_US
dc.title	Selling goods of unknown quality: Forward versus spot auctions	en_US
dc.type	Journal Article
utslib.citation.volume	3	en_US
utslib.citation.volume	15	en_US
utslib.for	1402 Applied Economics	en_US
utslib.for	1401 Economic Theory	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	closed_access
pubs.issue	3	en_US
pubs.publication-status	Published	en_US
pubs.volume	15	en_US

Abstract:

We consider an environment where the sale can take place so early that both the seller and potential buyers have the same uncertainty about the quality of the good. We present a simple model that allows the seller to offer the good for sale before or after this uncertainty is resolved, namely via forward auction or spot auction, respectively. We solve for the equilibrium of these two auctions and then compare the resulting expected revenues. We also consider the revenue implications of insurance in forward auctions. © 2011 Springer-Verlag.

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http://hdl.handle.net/10453/118259