Template-Type:ReDIF-Paper 1.0  
Title:How (not) to sell nuclear weapons
Author-Name:ehiel, Philippe
Author-Name: Benny Moldovanu
Author-Name: Ennio Stacchetti
Classification-JEL:
Keywords:
Abstract:We study the problem of a seller who wants to maximize her revenue in situations where the outcome of the sale
	affects the nature of the future interaction between agents. We model those situations by assuming that an agent that does not
	acquire the object for sale incurs an externality that may depend both on the identity of the sufferer and on the identity of the
	final purchaser. We describe an optimal auction that has a unique Nash equilibrium in strictly dominant strategies. We show
	that: 1) Ouside options are endogenously determined in equilibrium. Participation constraints and the "threats" in case of
	non-participation play an important role. 2) An optimizing seller can extract surplus also from buyers that do not optain the
	auctioned object. 3) The seller is better off by not selling at all (while obtaining some payments) if externalities are large when
	compared to the pure profits that buyers achieve if they acquire the object. 4) The revenue-maximizing equilibrium is
	coalition-proof if buyers cannot organize side payments among themselves. 
Length: pages
Creation-Date: 1994-07
Revision-Date: 
Handle: RePEc:bon:bonsfb:288