Citation

Discussion Paper Details

Please find the details for DP13542 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Optimal Selling Mechanisms with Endogenous Proposal Rights

Author(s): Sarah Auster, Nenad Kos and Salvatore Piccolo

Publication Date: February 2019

Keyword(s): bargaining power, mechanism design and Optimal Pricing

Programme Area(s): Industrial Organization

Abstract: We study a model of optimal pricing where the right to propose a mechanism is determined endogenously: a privately informed buyer covertly invests to increase the probability of offering a mechanism. We establish the existence of equilibrium and show that higher types get to propose a mechanism more often than lower types allowing the seller to learn from the trading process. In any equilibrium, the seller either offers the price he would have offered if he was always the one to make an offer or randomises over prices. Pure strategy equilibria may fail to exist, even when types are continuously distributed. A full characterization of equilibria is provided in the model with two types, where notably the seller's profit is shown to be non-monotonic in the share of high-value buyers.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13542

Bibliographic Reference

Auster, S, Kos, N and Piccolo, S. 2019. 'Optimal Selling Mechanisms with Endogenous Proposal Rights'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13542