Promoting Entry and Efficiency via Reserve Prices

Reserve prices are used by sellers to modify the allocation induced standard auctions. The existing literature has shown that, if number of bidders is fixed, a reserve price can be increase expected revenues. This comes at expense efficiency when auctioned good goes unsold. Instead, not may discourage entry. reduction in caused this situation detrimental for both revenues and efficiency. work shows that different conclusion emerge potential entrants arrive sequentially face risk incurring losses conditional on winning object sale. In fact, we show lead more entry raise Applications characterized presence an incumbent who better informed about some common characteristics sale yield type features needed our hold.