Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129557
Authors: 
Loertscher, Simon
Niedermayer, Andras
Year of Publication: 
2014
Series/Report no.: 
Working Paper Series, Department of Economics, University of Mannheim 14-04
Abstract: 
Mechanisms according to which private intermediaries or governments charge transaction fees or indirect taxes are prevalent in practice. We consider a setup with multiple buyers and sellers and two-sided independent private information about valuations. We show that any weighted average of revenue and social welfare can be maximized through appropriately chosen transaction fees and that in increasingly thin markets such optimal fees converge to linear fees. Moreover, fees decrease with competition (or the weight on welfare) and the elasticity of supply but decrease with the elasticity of demand. Our theoretical predictions fit empirical observations in several industries with intermediaries.
Subjects: 
brokers
applied mechanism design
linear commission fees
optimal indirect mechanisms
auction houses
JEL: 
C72
C78
L13
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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