Auctions with heterogeneous entry costs

Diego Moreno, John Wooders

    Research output: Contribution to journalArticle

    Abstract

    If bidders have independent private values and homogeneous entry costs, a first- or second-price auction with a reserve price equal to the seller's value maximizes social surplus and seller revenue. We show that if entry costs are heterogeneous and private information, then the revenue-maximizing reserve price is above the seller's value, a positive admission fee (and a reserve price equal to the seller's value) generates more revenue, and an entry cap combined with an admission fee generates even more revenue. Social surplus and seller revenue may either increase or decrease in the number of bidders, but they coincide asymptotically.

    Original languageEnglish (US)
    Pages (from-to)313-336
    Number of pages24
    JournalRAND Journal of Economics
    Volume42
    Issue number2
    DOIs
    StatePublished - Jun 1 2011

    Fingerprint

    Entry costs
    Seller
    Auctions
    Revenue
    Reserve price
    Admission
    Fees
    Surplus
    Independent private values
    Social values
    First-price auction
    Second-price auction
    Private information

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Auctions with heterogeneous entry costs. / Moreno, Diego; Wooders, John.

    In: RAND Journal of Economics, Vol. 42, No. 2, 01.06.2011, p. 313-336.

    Research output: Contribution to journalArticle

    Moreno, Diego ; Wooders, John. / Auctions with heterogeneous entry costs. In: RAND Journal of Economics. 2011 ; Vol. 42, No. 2. pp. 313-336.
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