Participation and Welfare in Auctions with Default

Lee, J.; Li, D.Z.

Abstract

In an auction with costly participation, we show that bidder default may cause social welfare loss through (i) the possibility of no trade and (ii) the under participation of bidders in equilibrium. We also provide closed-form solutions to the model.

Citation

Lee, J., & Li, D. (2019). Participation and Welfare in Auctions with Default. Economics Letters, 183, https://doi.org/10.1016/j.econlet.2019.108620

• Journal Article Type: Article
• Acceptance Date: Aug 12, 2019
• Online Publication Date: Aug 14, 2019
• Publication Date: Oct 31, 2019
• Deposit Date: Aug 19, 2019
• Publicly Available Date: Feb 14, 2021
• Journal: Economics Letters
• Print ISSN: 0165-1765
• Electronic ISSN: 1873-7374
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 183
• DOI: https://doi.org/10.1016/j.econlet.2019.108620
• Public URL: https://durham-repository.worktribe.com/output/1290103