Auctions With Aftermarket for Budget Constrained Bidders Export

@unpublished{masili_06_aftermarket_budget_constraint, abstract = {The paper compares di¤erent auction formats for sale of a single patented innovation for budget constrained bidders. This unit decreases the marginal cost of production in the aftermarket for its owner by an amount which de- pends on the money invested on the development of this technology. As the bidders have a …xed budget that must be used to pay the …nal auction price and also to develop the new technology, the winner has incentives to pay a low amount for his unit to increase the amount available to invest in cost reduction. Conversely the loser has incentives to induce induce a higher price to be paid by the winner in order to increase aftermarket pro…ts. This con‡ict of interest generates the willingness to pay (WTP) for the patent through an endogenous process, which may end up by stablishing a higher WTP for the lowest …nanced …rm. Given this background, the case in which the players have di¤erent initial budgets may generate multiple equilibria for all studied auction mechanisms. These equilibria produce di¤erent consumer surplus and, thus, a central government with an unti-trust behavior is able to choose the auction that generates the re…ned equilibrium leading to the highest consumer surplus.}, author = {Gustavo, Masili}, citeulike-article-id = {2636933}, citeulike-linkout-0 = {http://ideas.repec.org/p/pra/mprapa/2134.html}, howpublished = {MPRA}, keywords = {after\_market, auctions, budget\_constraint, cost\_reducing\_investment, cournot, patent}, month = {July}, posted-at = {2008-04-07 10:20:43}, priority = {0}, title = {Auctions With Aftermarket for Budget Constrained Bidders}, url = {http://ideas.repec.org/p/pra/mprapa/2134.html}, year = {2006} }

TY - UNPB ID - masili_06_aftermarket_budget_constraint L3 - citeulike-article-id:2636933 N2 - The paper compares di¤erent auction formats for sale of a single patented innovation for budget constrained bidders. This unit decreases the marginal cost of production in the aftermarket for its owner by an amount which de- pends on the money invested on the development of this technology. As the bidders have a …xed budget that must be used to pay the …nal auction price and also to develop the new technology, the winner has incentives to pay a low amount for his unit to increase the amount available to invest in cost reduction. Conversely the loser has incentives to induce induce a higher price to be paid by the winner in order to increase aftermarket pro…ts. This con‡ict of interest generates the willingness to pay (WTP) for the patent through an endogenous process, which may end up by stablishing a higher WTP for the lowest …nanced …rm. Given this background, the case in which the players have di¤erent initial budgets may generate multiple equilibria for all studied auction mechanisms. These equilibria produce di¤erent consumer surplus and, thus, a central government with an unti-trust behavior is able to choose the auction that generates the re…ned equilibrium leading to the highest consumer surplus. TI - Auctions With Aftermarket for Budget Constrained Bidders KW - after_market KW - auctions KW - budget_constraint KW - cost_reducing_investment KW - cournot KW - patent AU - Gustavo, Masili PY - 2006/07// UR - http://ideas.repec.org/p/pra/mprapa/2134.html ER -