Seller Prefers Research Articles

The determinants of forest land prices: an empirical analysis

In this paper, we estimate a forest land price model using micro data, where the equilibrium price is interpretable as the outcome of a trading game between the buyer and seller. A novelty of the empirical analysis is the recognition that the forest land price, which has been agreed upon by the buyer and seller, may depend on variables characterizing the buyer's and seller's preferences and choice sets. The results imply that forest land prices are not only determined by land related variables (e.g., the land size, timber volume, and site productivity), they also depend significantly on buyer and seller characteristics.

A Dual Dutch Auction in Taipei: The Choice of Numeraire and Auction Form in Multi-Object Auctions with Bundling

In Taipei we observed a dual Dutch fish auction, like a conventional Dutch auction with bundling but with the roles of quantity and price reversed, and fish the numeraire rather than money. This paper uses a symmetric independent private values framework to study how duality interacts with auction form when agents' utility functions are linear in money but strictly concave in fish. With known buyers' values, conventional and dual auctions, English or Dutch, are equivalent. With values known to buyers but not the seller, the seller prefers conventional to dual auctions. With privately known values, the seller can prefer either a dual Dutch auction or a conventional English or Dutch auction, but he prefers all three to a dual English auction.

Bundling decisions for selling multiple objects

Auctioneers often face the decision of whether to bundle two or more different objects before selling them. Under a Vickrey auction (or any other revenue equivalent auction form) there is a unique critical number for each pair of objects such that when the number of bidders is fewer than that critical number the seller strictly prefers a bundled sale and when there are more bidders the seller prefers unbundled sales. This property holds even when the valuations for the objects are correlated for a given bidder. The results have been proved using a mathematical technique of quantiles that can be extremely useful for similar analysis.

Why are idiosyncratic goods produced to order?

We argue that goods are “idiosyncratic” when customer(s) face insignificant competition from excluded consumer(s); in which case the seller prefers producing to order to avoid sinking its production costs before bargaining begins. By contrast, the seller of a “standardised” good can exploit its outside option of selling to a rival consumer to raise the price agreed during bargaining, and can therefore produce such a good to stock. This argument explains the stylised facts on the order/stock distinction.

Warranty design under buyer and seller risk aversion

AbstractThis paper provides a framework in which warranty policies for non‐repairable items can be evaluated according to risk preferences of both buyers and sellers. In particular, a warranty price schedule is established such that sellers are indifferent among the policies. Given this schedule, a buyer's response is expressed by selecting the price‐warranty combination that minimizes disutility. Within this framework, a warranty can be viewed as an instrumet of risk management that can induce more sales and greater profitability. For given utility functions, analytical results for the development of a price schedule are developed. Numerical results illustrate the substitution effects between warranty terms, prices, and risk parameters.