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T-Space at The University of Toronto Libraries >
Theoretical Economics >
Volume 5, Number 2 (May 2010) >

Please use this identifier to cite or link to this item: http://hdl.handle.net/1807/27189

Title: Competing auctions: finite markets and convergence
Authors: Gábor Virág; Department of Economics, University of Rochester
Keywords: Competing auctions, finite markets, convergence
D44, D82, D83
Issue Date: 17-May-2010
Publisher: Theoretical Economics
Citation: Theoretical Economics; Vol 5, No 2 (2010)
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/] The literature on competing auctions offers a model where sellers compete for buyers by setting reserve prices freely. An important outstanding conjecture (e.g. Peters and Severinov (1997)) is that the sellers post prices close to their marginal costs when the market becomes large. This conjecture is confirmed in this paper. More precisely, we show that if all sellers have zero costs, then the equilibrium reserve price converges to 0 in distribution. I also show that if there is a high enough lower bound on the buyers’ valuations, then there is a symmetric pure strategy equilibrium. In this equilibrium, if the number of buyers (sellers) increases, then the equilibrium reserve price increases (decreases) and the reserve price is decreasing in the size of the market.
URI: http://hdl.handle.net/1807/27189
Other Identifiers: http://econtheory.org/ojs/index.php/te/article/view/20100241
Rights: Authors who publish in <i>Theoretical Economics</i> will release their articles under the <a href="http://creativecommons.org/licenses/by-nc/2.5/">Creative Commons Attribution-NonCommercial license</a>. This license allows anyone to copy and distribute the article for non-commercial purposes provided that appropriate attribution is given.
Appears in Collections:Volume 5, Number 2 (May 2010)

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