English Auction vs Posted Price Selling: The Case of the Average Common Value

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English Auction vs Posted Price Selling The
Case of the Average Common Value

• By Fanny SABARIT
• DISCUSSION BY ROBERTO CELLINI
• (University of Catania, cellini_at_unict.it)

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Content of the paper

• A theoretical model is considered in which
• English auctions and posted price selling
  mechanisms are compared
• The focus is on the result for the sellers (the
  interest is in the expected revenue of the
  seller).
• (Bargaining is not considered -but
  Bulow-Klemperer, 1996, find that English auctions
  always dominate bargaining for the sellers)
• Main result obtained

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• Main result obtained
• if buyers are three,
• if the distribution of individual signals is
  uniform,
• if the sellers can set a reservation price,
• if there is a cost of storage for unsold goods,
• Then,posted price selling can be better for the
  seller, as compared to auction, depending on the
  cost of storage function

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General comments

• Computations are correct (but cumbersome), in
  line with this strand of literature
• However,
• Are the results robust to a larger number of
  sellers?
• How conditions (concerning the superiority of
  posted price) change, as the number of sellers
  becomes larger?
• Clearcut results are obtained under storage cost
  equal to zero in such a case, posted price is
  better
• (but I imagine that a threshold level of storage
  cost can exist, under which posted price is
  better, depending on what?)

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General comments

• The whole analysis is made for the perspective of
  sellers, but in the decision of selling
  mechanisms also consumers can take part, .
• A welfare analysis approach, considering also the
  demand side, could be interesting.

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• In general, the theoretical result seems to be
  that
• In a general framework, no single method of
  selling is optimal for sellers, under all
  circumstances (as the real world documents!)
• So, (apart from the elegant formalization), which
  is the most important result of your paper?