American Economic Journal Microeconomics· 2026Q1
Recurring Auctions with Costly Entry: Theory and Evidence
- 1citations
- Q1SCImago
- 2026year
Short summary
Recurring auctions, compared to single-round auctions, increase efficiency by 16.60% (US$3.40 billion) and revenue by 15.92% (US$2.97 billion) when buyers face entry costs, as demonstrated in Chinese home foreclosure auctions.
AI-generated from the title and abstract; the full text is not read.
Key points
- Recurring auctions outperform single-round auctions when buyers face entry costs.
- Theoretical analysis shows sorted entry of buyers enhances efficiency and revenue.
- Empirical data from Chinese home foreclosure auctions show annual efficiency gains of 16.60% (US$3.40 billion) and revenue gains of 15.92% (US$2.97 billion).
- Optimal reserve price sequences can further improve efficiency by 3.35% and revenue by 3.06%.
AI-generated from the title and abstract; the full text is not read.
Abstract
Recurring auctions are widely used to sell durable assets, with follow-up auctions held for unsold items. We investigate such auctions theoretically and empirically. Theoretical analysis demonstrates that recurring auctions outperform single-round auctions when buyers face entry costs, enhancing efficiency and revenue due to sorted entry of potential buyers. Optimal reserve price sequences are characterized. Empirical findings from home foreclosure auctions in China reveal significant annual gains in efficiency (US$3.40 billion, 16.60 percent) and revenue (US$2.97 billion, 15.92 percent) using recurring auctions compared with single-round auctions. Implementing optimal reserve prices can further improve efficiency (3.35 percent) and revenue (3.06 percent). (JEL D44, D82, R31)
The authors' abstract, as published at the source. American Economic Journal Microeconomics, 2026 · DOI ↗
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Field: Management Science and Operations Research
Management Science and Operations ResearchDecision Sciences