Internet auctions with many traders

A multi-unit auction environment similar to EBay is studied. Sellers who wish to sell a single unit of a homogenous good set reserve prices for their own independently run auctions. Buyers who hope to acquire a single unit bid as often as they like in a dynamic second-price auction. When the number of buyers and sellers is large but nite, there is a Bayesian equilibrium for this completely decentralized trading procedure in which the ex post eÆcient set of trades occurs at a uniform trading price. Remarkably, the strategy rules that buyers and sellers use in this equilibrium are very simple. They do not depend in any way on beliefs, or on the number of buyers and sellers.