Entry fees in auctions level the playing field for bidders.
The article explores auctions where bidders decide whether to participate based on their values and the number of potential bidders. The researchers found that only bidders with values above a certain point will join the auction. Both first- and second-price auctions yield the same revenue. Surprisingly, increasing the number of potential bidders may not increase the seller's revenue. Charging an entry fee is shown to be beneficial for the seller, which goes against previous auction studies.