We study auctions for an indivisble object. The outcome of the auction influences the future interaction among agents. The impact of that interaction on agent i is assumed to be a funciton of the agents' valuations. While agent's i valuation is private information to i, other valuations are not observable by i at the time of the auction. We derive equilibrium bidding strategies for second price auctions in which the seller may impose reserve prices or entry fees, and we point out differences between the cases where impacts (which we call externalities) are positive or negative. Finally, we study the effect of reserve prices and entry fees on the seller's revenue.
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Paper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number
1243.
Length: Date of creation: Oct 1998 Date of revision: Handle: RePEc:nwu:cmsems:1243
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