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Auctions Versus Private Negotiations in Buyer-Seller Networks

Department of Economics, Southern Illinois University, Carbondale, IL 62901,USA
Academic Editor: Ulrich Berger
Games 2016, 7(3), 22;
Received: 7 July 2016 / Revised: 17 August 2016 / Accepted: 24 August 2016 / Published: 31 August 2016
PDF [313 KB, uploaded 31 August 2016]


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

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