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Ranking equilibrium competition in auctions with participation costs

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  • Li, Daniel Z.

Abstract

This paper studies the degrees of equilibrium competition in three common forms of auctions with costly participation, and shows that, when bidders’ valuation distribution is concave, there is a simple condition to rank the equilibrium competition of those auctions. It also investigates how the results are related to stochastic ordering of bidders’ valuation distributions, and provides some illustrative examples.

Suggested Citation

  • Li, Daniel Z., 2017. "Ranking equilibrium competition in auctions with participation costs," Economics Letters, Elsevier, vol. 153(C), pages 47-50.
    • Handle: RePEc:eee:ecolet:v:153:y:2017:i:c:p:47-50
    DOI: 10.1016/j.econlet.2017.02.003
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    References listed on IDEAS

    as
    1. Cremer, Jacques & Spiegel, Yossi & Zheng, Charles Zhoucheng, 2007. "Optimal search auctions," Journal of Economic Theory, Elsevier, vol. 134(1), pages 226-248, May.
    2. Tan, Guofu & Yilankaya, Okan, 2006. "Equilibria in second price auctions with participation costs," Journal of Economic Theory, Elsevier, vol. 130(1), pages 205-219, September.
    3. Samuelson, William F., 1985. "Competitive bidding with entry costs," Economics Letters, Elsevier, vol. 17(1-2), pages 53-57.
    4. Cao, Xiaoyong & Tian, Guoqiang, 2010. "Equilibria in first price auctions with participation costs," Games and Economic Behavior, Elsevier, vol. 69(2), pages 258-273, July.
    5. McAfee, R. Preston & McMillan, John, 1987. "Auctions with entry," Economics Letters, Elsevier, vol. 23(4), pages 343-347.
    6. Szech, Nora, 2011. "Optimal advertising of auctions," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2596-2607.
    7. Levin, Dan & Smith, James L, 1994. "Equilibrium in Auctions with Entry," American Economic Review, American Economic Association, vol. 84(3), pages 585-599, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Boris Ginzburg, 2021. "Optimal Price Of Entry Into A Competition," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 280-286, January.
    2. Lee, Joosung & Li, Daniel Z., 2019. "Participation and welfare in auctions with default," Economics Letters, Elsevier, vol. 183(C), pages 1-1.
    3. Joosung Lee & Daniel Z. Li, 2018. "Sequential Search Auctions with a Deadline," Department of Economics Working Papers 2018_03, Durham University, Department of Economics.
    4. Minbo Xu & Daniel Z. Li, 2019. "Equilibrium competition, social welfare and corruption in procurement auctions," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 53(3), pages 443-465, October.

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    More about this item

    Keywords

    Auctions; Participation costs; Competition; Concave distribution; First order stochastic dominance;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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