Abstract:
In a model with two buyers and sellers we consider the choice of sales mechanism from three possibilities: posted prices, and
auctions with and without reserve prices. With homogenous goods, sellers expected revenues are highest when both sellers auction with
reserve prices 33% higher than if posting prices and 100% higher than if auctioning without reserve prices. When sellers can choose
their mechanism before choosing prices, both sellers auction with a reserve price in the dominant strategy equilibrium. With
heterogenous goods, the equilibrium with posted prices is inefficient (Montgomery (1991)) but the equilibria with both types of auctions
are efficient.
