Publication Type

Journal Article

Version

publishedVersion

Publication Date

11-2025

Abstract

This paper considers two competing auctions with objects differentiated according to the random utility framework introduced in Perloff and Salop (1985): bidders privately observe their values for the two objects, and values are ex ante i.i.d. across objects and across bidders. For the case of uniform distribution of values, we show that competition under entry fees is less intense than competition under reserve prices in the sense that sellers are better off, and bidders are worse off when competition takes place with entry fees rather than under reserve prices. The key difference between the two settings is that undercutting under entry fees is less effective as a business stealing tool than under reserve prices. This reduces each seller’s incentive to undercut, and in turn increases sellers’ equilibrium revenues. This result contrasts with the equivalence between reserve prices and entry fees in a standard one-object monopoly auction.

Keywords

second-price auctions, auction competition, entry fee, reserve price

Discipline

Econometrics | Economic Theory

Research Areas

Applied Microeconomics; Economic Theory

Publication

Mathematical Social Sciences

Volume

42

First Page

2151

Last Page

2170

ISSN

0165-4896

Identifier

10.1016/j.mathsocsci.2025.102476

Publisher

Elsevier

Additional URL

https://doi.org/10.1016/j.mathsocsci.2025.102476

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