Participation and welfare in auctions with default

Joosung Lee and Daniel Li ()

Economics Letters, 2019, vol. 183, issue C, -

Abstract: In an auction with costly participation, we show that bidder default may cause social welfare loss through (i) the possibility of no trade and (ii) the under participation of bidders in equilibrium. We also provide closed-form solutions to the model.

Keywords: Auction; Default; Participation cost; Welfare loss (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:183:y:2019:i:c:31

DOI: 10.1016/j.econlet.2019.108620

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