Summary.
Bulow and Klemperer [1] have provided an upper bound on the value of bargaining power for a seller of an indivisible object. Specifically, negotiating optimally with N buyers yields lower revenue than an English auction with N + 1 buyers. In this paper, a short and intuitive proof of this result is presented.
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Received: 2 August 2004, Revised: 6 December 2004,
JEL Classification Numbers:
C78, D44, D82.
I would like to thank Per B. Overgaard and an anonymous referee for many valuable comments.
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Kirkegaard, R. A short proof of the Bulow-Klemperer auctions vs. negotiations result. Economic Theory 28, 449–452 (2006). https://doi.org/10.1007/s00199-004-0593-2
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DOI: https://doi.org/10.1007/s00199-004-0593-2