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Games 2016, 7(3), 22; doi:10.3390/g7030022

Auctions Versus Private Negotiations in Buyer-Seller Networks

Department of Economics, Southern Illinois University, Carbondale, IL 62901,USA
Academic Editor: Ulrich Berger
Received: 7 July 2016 / Revised: 17 August 2016 / Accepted: 24 August 2016 / Published: 31 August 2016
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Abstract

Buyer-seller networks where price is determined by an ascending-bid auction are important in many economic examples such as certain real estate markets, radio spectrum sharing, and buyer-supplier networks. However, it may be that some sellers are better off not participating in the auction. We consider what happens if sellers can make a take it or leave it offer to one of their linked buyers before the auction takes place and thus such a seller can choose not to participate in the auction. We give conditions on the graph and buyers valuations under which the buyer and seller will both agree to such a take it or leave it offer. Specifically, the buyer-seller pair will choose private negotiation over the auction if the seller acts as a network bridge with power over the buyer and if there are enough buyers with low valuations so that the seller does not expect to receive a high price in the auction. View Full-Text
Keywords: auctions; buyer-seller networks; bridges auctions; buyer-seller networks; bridges
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Watts, A. Auctions Versus Private Negotiations in Buyer-Seller Networks. Games 2016, 7, 22.

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