Hitotsubashi Institute for Advanced Study


Which Good to Sell First in a Sequential Auction?


In a sequential auction, we analyze whether selling a stochastically more valuable good in the first or second auction generates more revenue and welfare. One of the buyers is a global bidder who enjoys synergy if sh wins both goods. The others are local bidders interested in one specific good. After delivering the equilibrium, we show that there are cases in which selling the less valuable good in the first auction generates higher revenue and/or welfare. We also show the impact of inefficient allocations on revenue.

Report No.: HIAS-E-45
Author(s): Hikmet Gunay(a), (b)
Xin Meng(c)
Affiliation: (a) Hitotsubashi Institute for Advanced Study, Hitotsubashi University, 2-1, Naka, Kunitachi, Tokyo 186-8601 Japan
(b) Department of Economics, University of Manitoba, Winnipeg, MB, R3T 5V5, Canada
(c) CIBO, Dongbei University of Finance and Economics, Dalian, 116025, China
Issued Date: May 2017
Keywords: Sequential Auctions, Inefficiencies, Multi-dimensional Values, Simulations
JEL: D44, D82