DP4080 Auctions with Private Entry Costs

Author(s): Todd Kaplan, Aner Sela
Publication Date: October 2003
Keyword(s): asymmetric auctions, entry costs, symmetric auctions
JEL(s): D44, O31, O32
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=4080

We study auctions where bidders have private information about their entry costs and the seller does not benefit from these entry costs. We consider a symmetric environment where all bidders have the same value for the object being sold, and also an asymmetric environment where bidders may have different valuations for the object. In these environments, the seller?s pay-off as well as the social surplus may either increase or decrease in the number of bidders though not necessarily in the same direction. The auction designs that maximize the social surplus or the seller?s pay-off are analysed.