Regulating bidder participation in auctions

• Autores: Vivek Bhattacharya, James W. Roberts, Andrew Sweeting
• Localización: The Rand Journal of Economics, ISSN-e 1756-2171, Vol. 45, Nº. 4, 2014, págs. 675-704
• Idioma: inglés
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• Resumen

  • Regulating bidder participation in auctions can potentially increase efficiency compared to standard auction formats with free entry. We show that the relative performance of two such mechanisms, a standard first-price auction with free entry and an entry rights auction, depends nonmonotonically on the precision of information that bidders have about their costs prior to deciding whether to participate in a mechanism. As an empirical application, we estimate parameters from first-price auctions with free entry for bridge-building contracts in Oklahoma and Texas and predict that an entry rights auction increases efficiency and reduces procurement costs significantly.