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Reserve Prices in Repeated Auctions

Octavian Carare
University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics

August 2008

Abstract:
This paper aims to estimate the effect on revenue of imposing a reserve price in repeated auctions. We develop a model of search and use its predictions to estimate the bidders' valuations. We apply the predictions of the search model to data obtained from online surplus auctions of personal computer processors and find economically significant gains from imposing a reserve price. The revenue maximizing reserve price improves revenue by about 25% for a sub-sample of our auctions.

Keywords: Repeated auctions, reserve price, estimation

JEL Classifications: D44, D83

Working Paper Series

Date posted: August 31, 2008 ; Last revised: August 31, 2008

Suggested Citation

Carare, Octavian, Reserve Prices in Repeated Auctions (August 2008). Available at SSRN: http://ssrn.com/abstract=1261288

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Contact Information

Octavian Carare (Contact Author)

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics ( email )

2601 North Floyd Road
P.O. Box 830688
Richardson, TX 75083
United States