No-Trade in Second-Price Auctions with Entry Costs and Secret Reserve Prices
8 Pages Posted: 7 Jun 2016 Last revised: 23 Sep 2018
Date Written: May 9, 2017
We consider a second-price private-value auction in the presence of an exogenous participation cost and a secret reserve price endogenously set by the seller. We show that, if the entry cost is strictly positive, the only equilibrium outcome is that the seller chooses a reserve price that deters entry and no buyer enters.
Keywords: auctions; entry; participation costs; reserve prices; no-trade equilibria
JEL Classification: D44
Suggested Citation: Suggested Citation