Regulating Bidder Participation in Auctions

Vivek Bhattacharya, James W. Roberts, Andrew Sweeting

NBER Working Paper No. 19352
Issued in August 2013
NBER Program(s):   IO

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 non-monotonically 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.

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Document Object Identifier (DOI): 10.3386/w19352

Published: Vivek Bhattacharya & James W. Roberts & Andrew Sweeting, 2014. "Regulating bidder participation in auctions," RAND Journal of Economics, RAND Corporation, vol. 45(4), pages 675-704, December. citation courtesy of

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