Abstract
This paper studies sequential second price auctions with imperfect quantity commitment in environments involving single-unit demands, independent private values, and non-decreasing marginal costs. The paper characterizes the symmetric equilibrium strategy and demonstrates that the equilibrium price sequence is conditionally non-increasing, showing a downwards drift in cases in which the marginal cost exceeds the reserve price with positive probability. The paper also argues that unlike a strong seller who sets reserve prices strictly above marginal costs, a weak seller will typically prefer to commit to such inefficiently low reserve prices.
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G. E. Rodriguez is especially grateful to Charles Wilson for many conversations on this topic. The paper also benefited from the very useful comments of two referees.
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Rodriguez, G.E. Sequential auctions with imperfect quantity commitment. Econ Theory 49, 143–173 (2012). https://doi.org/10.1007/s00199-010-0545-y
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DOI: https://doi.org/10.1007/s00199-010-0545-y