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Auctions with Frictions: Recruitment, Entry, and Limited Commitment

Author

Listed:
  • Stephan Lauermann

    (The University of Bonn, Department of Economics)

  • Asher Wolinsky

    (Northwestern University, Department of Economics)

Abstract

Auction models are convenient abstractions of informal price-formation processes that arise in markets for assets or services. These processes involve frictions such as bidder recruitment costs for sellers, participation costs for bidders, and limitations on sellers' commitment abilities. This paper develops an auction model that captures such frictions. We derive several novel predictions; in particular, we find that outcomes are often inefficient, and the market sometimes unravels.

Suggested Citation

  • Stephan Lauermann & Asher Wolinsky, 2024. "Auctions with Frictions: Recruitment, Entry, and Limited Commitment," ECONtribute Discussion Papers Series 288, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:288
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    References listed on IDEAS

    as
    1. Jeremy Bulow & Paul Klemperer, 2009. "Why Do Sellers (Usually) Prefer Auctions?," American Economic Review, American Economic Association, vol. 99(4), pages 1544-75, September.
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    More about this item

    Keywords

    Auctions;

    JEL classification:

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

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