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Entry Deterrence in Dynamic Second-Price Auctions

Che, X.; Klumpp, T.

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Authors

X. Che

T. Klumpp



Abstract

We examine a dynamic second-price auction with independent private values and sequential costly entry. We show that delayed revelation equilibria exist in which some buyers place coordinated low early bids. These buyers revise their bids to reflect their true valuations just prior to the end of the auction. Compared to the benchmark immediate revelation equilibrium, in which buyers bid their valuations immediately after entry, fewer high-value bidders enter on expectation in the delayed revelation equilibria. Delayed revelation of buyer values decreases social welfare, but is necessary for bidders to have a strict participation incentive.

Citation

Che, X., & Klumpp, T. (2016). Entry Deterrence in Dynamic Second-Price Auctions. American Economic Journal: Microeconomics, 8(2), 168-201. https://doi.org/10.1257/mic.20140137

Journal Article Type Article
Acceptance Date Jun 13, 2015
Online Publication Date May 31, 2016
Publication Date 2016-05
Deposit Date Jun 14, 2015
Publicly Available Date Mar 29, 2024
Journal American Economic Journal: Microeconomics
Print ISSN 1945-7669
Electronic ISSN 1945-7685
Publisher American Economic Association
Peer Reviewed Peer Reviewed
Volume 8
Issue 2
Pages 168-201
DOI https://doi.org/10.1257/mic.20140137
Public URL https://durham-repository.worktribe.com/output/1436352

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