On Discrimination in Auctions with Endogenous Entry

Philippe Jehiel () and Laurent Lamy

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Abstract: When entry is exogenous, strong buyers should be discriminated against weak buyers to maximize revenues (Myerson 1981). When entry is endogenous so that entrants' expected payoffs do not depend on the proposed mechanism, optimal discrimination takes a completely different form. The revenue-maximizing equilibrium requires that there should be no discrimination with respect to entrants irrespective of their ex ante characteristics. Besides, those buyers who always participate should be discriminated against entrants independently of their strength. These predictions are independent of the equilibrium selection when the number of potential entrants grows large. The optimality of first-price auctions is also discussed.

Keywords: Auctions (search for similar items in EconPapers)
Date: 2015-08
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Citations: View citations in EconPapers (22)

Published in American Economic Review, 2015, 105 (8), pp.2595-2643. ⟨10.1257/aer.20131580⟩

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Journal Article: On Discrimination in Auctions with Endogenous Entry (2015)
Working Paper: On Discrimination in Auctions with Endogenous Entry (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01206167

DOI: 10.1257/aer.20131580

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