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Synergies and Price Trends in Sequential Auctions
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Synergies and Price Trends in Sequential Auctions

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Abstract

This paper considers sequential auctions where an individual's value for a bundle of objects is either greater than the sum of the values for the objects separately (positive synergy) or less than the sum (negative synergy). The authors show that the existence of positive synergies implies declining expected prices. When synergies are negative, expected prices are increasing.

Suggested Citation

  • Menezes, F. & Monteiro, P.K., 1999. "Synergies and Price Trends in Sequential Auctions," Papers 366, Australian National University - Department of Economics.
    • Handle: RePEc:fth:aunaec:366
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    1. Jane Black & David de Meza, 1992. "Systematic Price Differences Between Successive Auctionsare no Anomaly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(4), pages 607-628, December.
    2. Thomas D. Jeitschko & Elmar Wolfstetter, 2002. "Scale Economies and the Dynamics of Recurring Auctions," Economic Inquiry, Western Economic Association International, vol. 40(3), pages 403-414, July.
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    5. Bernhardt, Dan & Scoones, David, 1994. "A Note on Sequential Auctions," American Economic Review, American Economic Association, vol. 84(3), pages 653-657, June.
    6. Vanderporten, Bruce, 1992. "Timing of Bids at Pooled Real Estate Auctions," The Journal of Real Estate Finance and Economics, Springer, vol. 5(3), pages 255-267, September.
    7. Vanderporten, Bruce, 1992. "Strategic behavior in pooled condominium auctions," Journal of Urban Economics, Elsevier, vol. 31(1), pages 123-137, January.
    8. Krishna, Vijay & Rosenthal, Robert W., 1996. "Simultaneous Auctions with Synergies," Games and Economic Behavior, Elsevier, vol. 17(1), pages 1-31, November.
    9. Ashenfelter, Orley & Genesove, David, 1992. "Testing for Price Anomalies in Real-Estate Auctions," American Economic Review, American Economic Association, vol. 82(2), pages 501-505, May.
    10. Chris Jones & Flavio Menezes & Francis Vella, 2004. "Auction Price Anomalies: Evidence from Wool Auctions in Australia," The Economic Record, The Economic Society of Australia, vol. 80(250), pages 271-288, September.
    11. McAfee R. Preston & Vincent Daniel, 1993. "The Declining Price Anomaly," Journal of Economic Theory, Elsevier, vol. 60(1), pages 191-212, June.
    12. Branco, Fernando, 1997. "Sequential auctions with synergies: An example," Economics Letters, Elsevier, vol. 54(2), pages 159-163, February.
    13. Neil Gandal, 1997. "Sequential Auctions of Interdependent Objects: Israeli Cable Television Licenses," Journal of Industrial Economics, Wiley Blackwell, vol. 45(3), pages 227-244, September.
    14. repec:bla:jindec:v:45:y:1997:i:3:p:227-44 is not listed on IDEAS
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    Cited by:

    1. Cuihong Li & Laurens G. Debo, 2009. "Strategic dynamic sourcing from competing suppliers with transferable capacity investment," Naval Research Logistics (NRL), John Wiley & Sons, vol. 56(6), pages 540-562, September.
    2. J. Reiß & Jens Schöndube, 2010. "First-price equilibrium and revenue equivalence in a sequential procurement auction model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(1), pages 99-141, April.
    3. Indranil Chakraborty, 2004. "Multi-Unit Auctions with Synergy," Economics Bulletin, AccessEcon, vol. 4(8), pages 1-14.
    4. Gerard Marty & Raphaele Preget, 2007. "A Socio-economic Analysis of French Public Timber Sales," Working Papers - Cahiers du LEF 2007-03, Laboratoire d'Economie Forestiere, AgroParisTech-INRA.
    5. Miralles, Antonio, 2012. "Cardinal Bayesian allocation mechanisms without transfers," Journal of Economic Theory, Elsevier, vol. 147(1), pages 179-206.
    6. Rosato, Antonio, 2023. "Loss aversion in sequential auctions," Theoretical Economics, Econometric Society, vol. 18(2), May.
    7. Meng, Xin & Gunay, Hikmet, 2022. "Different Number of Bidders in Sequential Auctions," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 63(1), pages 72-85, June.
    8. El Hadi Caoui & Gérard Marty, 2023. "Random drawing in sequential auctions: investigating the role of a market device in timber sales," Review of Agricultural, Food and Environmental Studies, Springer, vol. 104(2), pages 101-122, June.
    9. Veronika Grimm, 2004. "On Procurement Auctions Of Complementary Goods," Working Papers. Serie AD 2004-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    10. Tang Sorensen, Soren, 2006. "Sequential auctions for stochastically equivalent complementary objects," Economics Letters, Elsevier, vol. 91(3), pages 337-342, June.
    11. Peyman Khezr & Flavio Menezes, 2018. "Auctions with an asking price," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(4), pages 1329-1350, November.
    12. Rosato, Antonio, 2014. "Loss Aversion in Sequential Auctions: Endogenous Interdependence, Informational Externalities and the "Afternoon Effect"," MPRA Paper 56824, University Library of Munich, Germany.
    13. Emmanuel LORENZON, 2020. "Uninformed Bidding in Sequential Auctions," Bordeaux Economics Working Papers 2020-20, Bordeaux School of Economics (BSE).
    14. Veronika Grimm, 2007. "Sequential versus Bundle Auctions for Recurring Procurement," Journal of Economics, Springer, vol. 90(1), pages 1-27, January.
    15. Audrey Hu & Liang Zou, 2014. "Sequential Auctions, Price Trends, and Risk Preferences," Tinbergen Institute Discussion Papers 14-139/I, Tinbergen Institute.
    16. Xiaoshu Xu & Dan Levin & Lixin Ye, 2012. "Auctions with synergy and resale," International Journal of Game Theory, Springer;Game Theory Society, vol. 41(2), pages 397-426, May.
    17. Stuart Kells, 2003. "Explaining The Breadth Of Expert Estimate Ranges In Auctions Of Rare Books," Department of Economics - Working Papers Series 873, The University of Melbourne.
    18. Audrey Hu & Liang Zou, 2016. "Sequential Auctions with Generalized Interdependent Values," Tinbergen Institute Discussion Papers 16-016/I, Tinbergen Institute.
    19. repec:ebl:ecbull:v:4:y:2004:i:8:p:1-14 is not listed on IDEAS
    20. Das Varma, Gopal, 2003. "Bidding for a process innovation under alternative modes of competition," International Journal of Industrial Organization, Elsevier, vol. 21(1), pages 15-37, January.
    21. Wittwer, Milena, 2020. "Interconnected pay-as-bid auctions," Games and Economic Behavior, Elsevier, vol. 121(C), pages 506-530.
    22. Menezes, Flavio M. & Monteiro, Paulo K., 2004. "Auctions with synergies and asymmetric buyers," Economics Letters, Elsevier, vol. 85(2), pages 287-294, November.
    23. Ramanathan Subramaniam & R. Venkatesh, 2009. "Optimal Bundling Strategies in Multiobject Auctions of Complements or Substitutes," Marketing Science, INFORMS, vol. 28(2), pages 264-273, 03-04.

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    More about this item

    Keywords

    AUCTIONS ; GAME THEORY ; PRICES;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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