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First-price auctions with unobservable entry

Author

Listed:
  • Cao, Xiaoyong
  • Wang, Wei

Abstract

We study the endogenous participation problem when bidders are characterized by a two-dimensional private information on values and participation costs in first-price auctions. Bidders make entry and bidding decisions simultaneously. Bidders participate whenever their costs are not greater than the expected revenue from participating. We show the existence and uniqueness of the symmetric equilibrium.

Suggested Citation

  • Cao, Xiaoyong & Wang, Wei, 2024. "First-price auctions with unobservable entry," Economics Letters, Elsevier, vol. 239(C).
    • Handle: RePEc:eee:ecolet:v:239:y:2024:i:c:s0165176524002465
    DOI: 10.1016/j.econlet.2024.111762
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    More about this item

    Keywords

    Existence and uniqueness; Two-dimensional private information; First-price auctions; Simultaneous entry; Participation costs;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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