Competing Intermediaries

About this event

We consider a trade setup between a seller and multiple buyers over the transaction of a single indivisible object and analyze a game where multiple intermediaries compete with each other to attract the seller. Agents have independent private valuations for this object and all players have quasilinear preferences. We show the existence and uniqueness of equilibrium outcomes. In any equilibrium, all intermediaries make zero expected profits while the allocation rule and the expected payoffs agents receive are equal to those that are accrued under the seller's revenue maximizing auction with reserve prices. Hence these unique outcomes can be implemented in an equilibrium in which all intermediaries announce standard auctions with reserve prices. Characterizing the unique equilibrium outcomes when there is a single monopolist intermediary, we show that competition among intermediaries unambiguously improves allocative efficiency as well as the agents' expected payoffs. However, we also show that relative to the equilibrium under competition, a social planner may further increase total surplus.