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Participation and exclusion in auctions

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  • Cheng, Harrison

Abstract

We provide extensions of the Bulow and Klemperer (1996) result when the seller has value for the object above the minimum value of the buyers. The result may fail. We show that the seller does better with more participation and some exclusion than the optimal exclusion of buyers of low value types. Some amount of exclusion, which is independent of the number of buyers, in the form of the minimum bid is needed to make participation the dominant method for improving the seller payoff from the auctions. There exists N0, which depends on the seller valuation, such that more participation with no exclusion is dominant if and only if the number of participants exceeds N0.

Suggested Citation

  • Cheng, Harrison, 2015. "Participation and exclusion in auctions," Economics Letters, Elsevier, vol. 129(C), pages 77-80.
    • Handle: RePEc:eee:ecolet:v:129:y:2015:i:c:p:77-80
    DOI: 10.1016/j.econlet.2015.01.031
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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 1544-1575, September.
    2. Bulow, Jeremy & Klemperer, Paul, 1996. "Auctions versus Negotiations," American Economic Review, American Economic Association, vol. 86(1), pages 180-194, March.
    3. Michael Ostrovsky & Michael Schwarz, 2023. "Reserve Prices in Internet Advertising Auctions: A Field Experiment," Journal of Political Economy, University of Chicago Press, vol. 131(12), pages 3352-3376.
    4. Wang, Ruqu, 2000. "Bidding and renegotiation in procurement auctions," European Economic Review, Elsevier, vol. 44(8), pages 1577-1597, August.
    5. Jeremy Bulow & Paul Klemperer, 2009. "Why Do Sellers (Usually) Prefer Auctions?," American Economic Review, American Economic Association, vol. 99(4), pages 1544-75, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Participation; Exclusion; Payoff comparison; Single crossing property; Bulow–Klemperer Theorem;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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