Document Type
Article
Publication Date
2014
Abstract
We experimentally compare first-price auctions and multilateral negotiations after introducing horizontal product differentiation into a standard procurement setting. Both institutions yield identical surplus for the buyer, a difference from prior findings with homogeneous products that results from differentiation's influence on sellers' pricing behaviour. The data are consistent with this finding being driven by concessions from low-cost sellers in response to differentiation reducing their likelihood of being the buyer's surplus-maximizing trading partner. Further analysis shows that introducing product differentiation increases the intensity of price competition among sellers, which contrasts with the conventional wisdom that product differentiation softens competition.
Recommended Citation
Thomas, Charles J., and Bart J. Wilson. "Horizontal product differentiation in auctions and multilateral negotiations." Economica 81.324 (2014): 768-787.
DOI:10.1111/ecca.12090
Peer Reviewed
1
Copyright
Wiley
Comments
This is the accepted version of the following article:
Thomas, Charles J., and Bart J. Wilson. "Horizontal product differentiation in auctions and multilateral negotiations. Economica 81.324 (2014): 768-787.
which has been published in final form at DOI: 10.1111/ecca.12090.