Auctions Versus Private Negotiations in Buyer-Seller Networks

Auctions Versus Private Negotiations in Buyer-Seller Networks

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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 socialstudiesscholar.com 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 superdry baseball top 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.