Auctions Versus Negotiations Revisited

When analyzing the classical monopoly problem, it is natural to start by assuming that demand is continuous and marginal revenue curves are monotonic. The same assumption, which we will refer to as the regularity assumption, is usually imposed in auction theory. In this paper we will consider departures from this assumption and discuss the robustness of existing results in auction theory. We also draw parallels between auction theory and bargaining theory with incomplete information and a number of buyers. In particular, auction theory can be used to explain why certain bargaining procedures are observed.

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