Three essays on auction, retail risk management and market share evolution

This dissertation consists of three essays that address various issues of auction mechanism, risk management and market evolution.; The first essay develops a new auction mechanism for private-value multiple-item auctions with flexible supply, which specifically focuses on the Business to Customer dealings. It is a second-price auction, which can generate an incentive compatible feature from all bidders. It has been proven that the application of the new mechanism to online auctions can generate more profit for a seller and make the online auction a more attractive distribution channel than before. In addition, a simultaneous market clearing mechanism has been provided, and a computer program has been generated. Under the simultaneous markets clearance setting, a seller has been proven to be able to generate even higher profit than under a regular monopoly.; The second essay establishes a new Business to Customer interaction dimension. This new interaction allows a firm to reach its potential customers directly through its existing web site, to continuously gather valuable private information from its potential customers, and to fulfill its real options realization. Meanwhile, customers are allowed to participate in the firm's investment decisions, and to attain control over the product selection decisions. It is proven that the retail risk management model brings more benefits to both parties. The extra benefits to both parties are generated by the extra layer of the option market, which reduces the risks for both parties and converts the risk into expected payoffs.; The third essay studies the tipping effect in a duopolistic operating system industry with one company initially possessing a dominant market share. Two models are presented to describe the market share evolution between the two operating system producers: Microsoft and Macintosh. The first model deals with software writers who compete monopolistically on the software market as independent vendors. The second model considers the vertical integration between operating systems and software applications. It is shown that the vertical integration model leads to less of a tipping effect than the model with independent software vendors, and a stable market sharing equilibrium can be achieved at a high market share level in the second model.