Articlegreen2008

Asymmetric Auctions with Resale

130 citations0/0 files storedAmerican Economic Review

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Auction Theory and Applications Art History and Market Analysis Game Theory and Voting Systems

Abstract

We study first- and second-price auctions with resale in a model with independent private values. With asymmetric bidders, the resulting inefficiencies create a motive for post-auction trade which, in our model, takes place via monopoly pricing—the winner makes a take-it-or-leave-it offer to the loser. We show (a) a first-price auction with resale has a unique monotonic equilibrium; and (b) with resale, the expected revenue from a first-price auction exceeds that from a second-price auction. The inclusion of resale possibilities thus permits a general revenue ranking of the two auctions that is not available when these are excluded. (JEL D44)

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References

1961COUNTERSPECULATION, AUCTIONS, AND COMPETITIVE SEALED TENDERS 1981Optimal Auction Design 1983Efficient mechanisms for bilateral trading 1999On the Existence of Pure and Mixed Strategy Nash Equilibria in Discontinuous Games 1989The Simple Economics of Optimal Auctions 2001Single Crossing Properties and the Existence of Pure Strategy Equilibria in Games of Incomplete Information 2000Asymmetric Auctions 2000Equilibrium in Sealed High Bid Auctions

Cited by

2020Credible Auctions: A Trilemma 2010Asymmetric first-price auctions with uniform distributions: analytic solutions to the general case 2013Resale and Rent-Seeking: An Application to Ticket Markets 2020Mechanism Design With Aftermarkets: Cutoff Mechanisms 2012A Mechanism Design Approach to Ranking Asymmetric Auctions 2015Entry and Subcontracting in Public Procurement Auctions 2014Mechanism Design by an Informed Principal: Private Values with Transferable Utility

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