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Abstract(s)
We study the impact of reserve prices on the revenue of English auctions using a unique hand-collected database of virtual football players from the online football management game Hattrick. As theoretically predicted, setting a reserve price entails a trade-off between the cost of setting it too high and having the good go unsold, and the benefit associated with a higher revenue should the reserve price successfully extract surplus from the highest bidder. Overall, we find the net benefit of setting a higher reserve price to be negative, regardless of the value of the reserve price. This is a novel result insofar as previous literature has generally found an insignificant or positive effect of the reserve price on unconditional auction revenue.
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Citation
GONÇALVES, Ricardo - Empirical Evidence on the Impact of Reserve Prices in English Auctions. Journal of Industrial Economics. ISSN 1467-6451. Vol. 61, N.º 1 (2013), p. 202–242
Publisher
John Wiley and Sons