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Second-Price Auctions with Private Entry Costs

21 Pages Posted: 11 Oct 2003  

Todd R. Kaplan

University of Exeter Business School - Department of Economics; University of Haifa - Department of Economics

Aner Sela

Ben-Gurion University of the Negev - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: September 20, 2006

Abstract

We study asymmetric second-price auctions under incomplete information. The bidders have potentially different, commonly-known, valuations for the object and private information about their entry costs. The seller, however, does not benefit from these entry costs. We calculate the equilibrium strategies of the bidders and analyze the optimal design for the seller in this environment.

Keywords: Symmetric auctions, Asymmetric auctions, Entry costs

JEL Classification: D44, O31, O32

Suggested Citation

Kaplan, Todd R. and Sela, Aner, Second-Price Auctions with Private Entry Costs (September 20, 2006). Available at SSRN: https://ssrn.com/abstract=442521 or http://dx.doi.org/10.2139/ssrn.442521

Todd R. Kaplan (Contact Author)

University of Exeter Business School - Department of Economics ( email )

Streatham Court
Exeter, EX4 4RJ
United Kingdom
+44 13 9226 3237 (Phone)

University of Haifa - Department of Economics

Haifa 31905
Israel

Aner Sela

Ben-Gurion University of the Negev - Department of Economics ( email )

Beer-Sheva 84105
Israel
+972 8 647 2309 (Phone)
+972 8 647 2941 (Fax)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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