Surplus extraction and competition

DOI10.1111/1467-937X.00183MaRDI QIDQ2763326zbMATH OpenFDO

Authors Michael Peters

Publication date 14 January 2002

Published in The Review of Economic Studies (Search for Journal in Brave)

Full work available at URL https://doi.org/10.1111/1467-937X.00183

zbMATH Keywords

correlated valuesdirect mechanismentry feesurplus

Mathematics Subject Classification ID

Auctions, bargaining, bidding and selling, and other market models (91B26)

Review text

A perfectly competitive economy is studied where sellers offer alternative direct mechanisms to buyers who have correlated private information about their valuations. It is shown that in the unique symmetric equilibrium with competition, sellers hold second-price auctions with reserve prices set equal to their cost. Furthermore, it is a best reply for sellers not to charge entry fees of the kind normally used to extract surplus, even though it is feasible for them to do so.

Recommendations

• Seller competition by mechanism design
• On second-price auctions and imperfect competition.
• Mechanism Design by Competing Sellers
• Vickrey-Clarke-Groves mechanisms and perfect competition
• Extracting the Surplus in the Common-Value Auction

Cited in

(13)

• Externalities, market power, and resource extraction
• Optimal prize allocation in contests: the role of negative prizes
• Competition among auctioneers in large markets
• Extracting interaction-created surplus
• Full surplus extraction from samples
• Uncertainty and robustness of surplus extraction
• Two-agent collusion-proof implementation with correlation and arbitrage
• Verifiability and group formation in markets
• Ex-post full surplus extraction, straightforwardly
• Correlated information, mechanism design and informational rents
• Inflating profits and industry competitiveness
• Informational smallness and the scope for limiting information rents
• From monopoly to competition: when do optimal contests prevail?

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