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We study stationary equilibria in a sequential auction setting. A seller runs a sequence of standard first-price or second-price auctions to sell an indivisible object to potential buyers. The seller can commit to the rule of the auction and the reserve price of the current period but not to reserve prices of future periods. We prove the existence of stationary equilibria and establish a uniform Coase conjecture—at any point in time and in any stationary equilibrium, the seller’s profit from running sequential auctions converges to the profit of running an efficient auction as the period length goes to zero.
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Auctions with Limited Commitment
We study the role of limited commitment in a standard auction environment. In each period, the seller can commit to an auction with a reserve price but not to future reserve prices. We characterize the set of equilibrium profits attainable for the seller as the period length vanishes. An immediate sale by efficient auction is optimal when there are at least three buyers. For many natural distributions two buyers is enough. Otherwise, we give conditions under which the maximal profit is attained through continuously declining reserve prices. (JEL D44, D82)
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- Award ID(s):
- 1824328
- PAR ID:
- 10282142
- Date Published:
- Journal Name:
- American Economic Review
- Volume:
- 109
- Issue:
- 3
- ISSN:
- 0002-8282
- Page Range / eLocation ID:
- 876 to 910
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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- Free Publicly Accessible Full Text
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Accepted Manuscript1.0
- Journal Article:
- https://doi.org/10.1257/aer.20170882
