Auctions with heterogeneous entry costs

Moreno, D; Wooders, J

Auctions with heterogeneous entry costs

Moreno, D Wooders, J

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Publication Type:: Journal Article
Citation:: RAND Journal of Economics, 2011, 42 (2), pp. 313 - 336
Issue Date:: 2011-06-01

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Field	Value	Language
dc.contributor.author	Moreno, D	en_US
dc.contributor.author	Wooders, J https://orcid.org/0000-0002-4206-7137	en_US
dc.date.issued	2011-06-01	en_US
dc.identifier.citation	RAND Journal of Economics, 2011, 42 (2), pp. 313 - 336	en_US
dc.identifier.issn	0741-6261	en_US
dc.identifier.uri	http://hdl.handle.net/10453/15755
dc.description.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. © 2011, RAND.	en_US
dc.relation.ispartof	RAND Journal of Economics	en_US
dc.relation.isbasedon	10.1111/j.1756-2171.2011.00135.x	en_US
dc.subject.classification	Economics	en_US
dc.title	Auctions with heterogeneous entry costs	en_US
dc.type	Journal Article
utslib.citation.volume	2	en_US
utslib.citation.volume	42	en_US
utslib.for	1401 Economic Theory	en_US
utslib.for	14 Economics	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	open_access
pubs.issue	2	en_US
pubs.publication-status	Published	en_US
pubs.volume	42	en_US

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. © 2011, RAND.

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http://hdl.handle.net/10453/15755