Optimal Auction Design with Aftermarket Cournot Competition
We study an optimal information/mechanism design problem for selling an object to a number of privately informed bidders, in which the winning bidder competes with a third party under differentiated Cournot competition afterwards. We show how to decompose the problem into two sub-problems: Bayesian persuasion and standard mechanism design. Full disclosure of the winner s marginal cost emerges as the unique optimal information policy, combined with allocating the auctioned object to the bidder with the highest virtual surplus