Competition through entry fees between auctions for differentiated objects (Q6890748)

This article considers two competing auctions with objects differentiated according to the random utility framework: bidders privately observe their values for the two objects, and values are ex ante i.i.d. across objects and across bidders. For the case of uniform distribution of values, the authors show that competition under entry fees is less intense than competition under reserve prices in the sense that sellers are better off, and bidders are worse off when competition takes place with entry fees rather than under reserve prices. This result contrasts with the equivalence between reserve prices and entry fees in a standard one-object monopoly auction. Section 2 introduces the model. The auction competitive analysis is given in Section 3. All proofs of the basic results are relegated to Appendix.