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Vickrey Auctions with Sequential and Costly Participation

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  • Tian, Guoqiang
  • Xiao, Mingjun

Abstract

This paper investigates the cutoff strategies and the effects of sequential and costly participation in Vickrey auctions with independent private value settings. It demonstrates a Stackelberg version of participation decision in auctions, while simultaneous participation can be regarded as a Cournot version in auctions. Buyers adopt cut-off participation strategies. In two-buyer case, the cutoff strategy equilibrium is unique. The follower's critical values are always monotonic in participation cost in both symmetric and asymmetric settings. This is also true for the leader with mild conditions on c.d.fs. We also characterize equilibria in three-buyer and more general n-buyer environments. We then study buyer's preference to be a leader or a follower. Comparison with simultaneous model shows that the driven-out effect is much stronger in our sequential participation model, which implies the simultaneous specification might not be desirable.

Suggested Citation

  • Tian, Guoqiang & Xiao, Mingjun, 2009. "Vickrey Auctions with Sequential and Costly Participation," MPRA Paper 41203, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:41203
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    File URL: https://mpra.ub.uni-muenchen.de/41203/1/MPRA_paper_41203.pdf
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    References listed on IDEAS

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    Cited by:

    1. Che, XiaoGang & Lee, Peter & Yang, Yibai, 2013. "The impact of resale on entry in second price auctions," Mathematical Social Sciences, Elsevier, vol. 66(2), pages 163-168.

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    More about this item

    Keywords

    Sequential Participation; Participation Cost; Second Price Auction;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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