A BEJTE Contributions article.

Abstract

We consider a single object, independent private value auction model with entry. Potential bidders are ex ante symmetric and randomize about entry. After entry, each bidder incurs a cost, then learns her private value and a set of signals that may lead to updated beliefs about other entrants' valuations. It is shown that the Vickrey auction with free entry maximizes the expected revenue. Furthermore, if the information potentially available to bidders after entry is sufficiently rich, then the Vickrey auction, up to its equivalent class, is also the only optimal sealed-bid auction.

Submitted: May 25, 2004 · Accepted: September 3, 2004 · Published: October 28, 2004

Originally published in Contributions to Theoretical Economics.

Recommended Citation

Ye, Lixin (2004) "Optimal Auctions with Endogenous Entry," Contributions to Theoretical Economics: Vol. 4 : Iss. 1, Article 8.
Available at: http://www.bepress.com/bejte/contributions/vol4/iss1/art8