Cao, Xiaoyong and Tian, Guoqiang (2012): SecondPrice Auctions with Different Participation Costs. Forthcoming in: Journal of Economics & Management Strategy

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Abstract
This paper studies equilibria of second price auctions in independent private value envi ronments with different participation costs. Two types of equilibria are identified: monotonic equilibria in which a bidder with a lower participation cost results in a lower cutoff for sub mitting a bid, and nonmonotonic equilibria in which a lower participation cost results in a higher cutoff. We show that there always exists a monotonic equilibrium, and further, that the monotonic equilibrium is unique for either concave distribution functions or strictly convex distribution functions with nonincreasing reverse hazard rates. There exist non monotonic equilibria when the distribution functions are strictly convex and the difference of the participation costs is sufficiently small. We also provide comparative static analysis and study the limiting properties of equilibria when the difference in bidders’ participation costs approaches zero.
Item Type:  MPRA Paper 

Original Title:  SecondPrice Auctions with Different Participation Costs 
Language:  English 
Keywords:  Private Values, Differentiated Participation Costs, Second Price Auctions, Nonmonotonic Equilibrium, Existence and Uniqueness of Equilibrium 
Subjects:  D  Microeconomics > D4  Market Structure and Pricing > D44  Auctions D  Microeconomics > D6  Welfare Economics > D61  Allocative Efficiency; CostBenefit Analysis D  Microeconomics > D8  Information, Knowledge, and Uncertainty > D82  Asymmetric and Private Information; Mechanism Design C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory > C72  Noncooperative Games C  Mathematical and Quantitative Methods > C6  Mathematical Methods; Programming Models; Mathematical and Simulation Modeling > C62  Existence and Stability Conditions of Equilibrium 
Item ID:  41200 
Depositing User:  Guoqiang Tian 
Date Deposited:  12. Sep 2012 12:53 
Last Modified:  19. Feb 2013 22:46 
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URI:  http://mpra.ub.unimuenchen.de/id/eprint/41200 