Reserve prices in second-price auctions with asymmetric bidders

Gagan Ghosh (), Bingchao Huangfu () and Heng Liu ()
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Gagan Ghosh: California State University Fullerton
Bingchao Huangfu: Nanjing Audit University
Heng Liu: Rensselaer Polytechnic Institute

Economic Theory Bulletin, 2025, vol. 13, issue 1, No 6, 69-77

Abstract: Abstract In second-price auctions with asymmetric bidders, we show that under a monotonicity condition on the ratio of marginal revenue functions there exists a unique optimal reserve price. The optimal reserve price increases with the number of (stochastically) strong bidders and decreases with the number of weak bidders. Fixing the total number of bidders, the seller’s revenue increases with the number of strong bidders.

Keywords: Reserve prices; Second-price auctions; Asymmetry (search for similar items in EconPapers)
JEL-codes: C72 D44 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s40505-024-00281-x

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