Auctions with Entry versus Entry in Auctions

28 Pages Posted: 14 Dec 2018

See all articles by Jiafeng Chen

Jiafeng Chen

Harvard University, Harvard College, Students

Scott Duke Kominers

Harvard University

Date Written: November 21, 2018

Abstract

We show that charging entry fees can sometimes dominate the benefit of recruiting additional bidders to auctions, even though the fees themselves implicitly reduce competition at the auction stage. We also highlight that admission fees and reserve prices are different instruments in a setting with uncertainty over entry costs, and that optimal mechanisms in such settings may be higher-dimensional than in Myerson (1981). Our results provide a counterpoint to the broad intuition of Bulow and Klemperer (1996) that market thickness often takes precedence over market power in auction design.

Keywords: Auctions, Entry, Reserve Prices, Entry Fees

JEL Classification: D44, D47, C78, D82

Suggested Citation

Chen, Jiafeng and Kominers, Scott Duke, Auctions with Entry versus Entry in Auctions (November 21, 2018). Available at SSRN: https://ssrn.com/abstract=3281615 or http://dx.doi.org/10.2139/ssrn.3281615

Jiafeng Chen

Harvard University, Harvard College, Students ( email )

Cambridge, MA
United States

Scott Duke Kominers (Contact Author)

Harvard University ( email )

Rock Center
Harvard Business School
Boston, MA 02163
United States

HOME PAGE: http://www.scottkom.com/

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