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Selling Goods of Unknown Quality: Forward versus Spot Auctions

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posted on 1995-07-01, 00:00 authored by Isa HafalirIsa Hafalir, Hadi Yektas
We consider an environment where the sale can take place so early that both the seller and the potential buyers have the same uncertainty about the quality of the good. We present a simple model that allows the seller to put 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 revenues. We also consider the revenue implications of the insurance in forward auctions.

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©1995 IEEE. Personal use of this material is permitted. However, permission to reprint/republish this material for advertising or promotional purposes or for creating new collective works for resale or redistribution to servers or lists, or to reuse any copyrighted component of this work in other works must be obtained from the IEEE

Date

1995-07-01

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    Forward TradingForward AuctionsSpot AuctionsBusiness and Management not elsewhere classified

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