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On asymmetric reserve prices

Author

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  • Kotowski, Maciej H.

    (John F. Kennedy School of Government, Harvard University)

Abstract

We investigate equilibrium bidding in first-price auctions with asymmetric reserve prices. For example, the auctioneer may set a low reserve price for one subset of bidders and a high reserve price for others. When used to pursue a distributional objective, lowering the reserve price for some bidders channels benefits toward marginal agents in the favored group and does not adversely impact non-favored bidders whose reserve price is unchanged. Even in symmetric environments, when the valuation distribution is not regular, introducing asymmetric reserve prices can increase the auctioneer's revenue compared to an optimal common reserve price. Implications for auction design are considered.

Suggested Citation

  • Kotowski, Maciej H., 2018. "On asymmetric reserve prices," Theoretical Economics, Econometric Society, vol. 13(1), January.
    • Handle: RePEc:the:publsh:1824
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    Cited by:

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    4. Kirkegaard, René, 2022. "Efficiency in asymmetric auctions with endogenous reserve prices," Games and Economic Behavior, Elsevier, vol. 132(C), pages 234-239.

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    More about this item

    Keywords

    First-price auction; asymmetric auctions; reserve price; mechanism design; affirmative action; procurement;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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