Virag, Gabor (2009): First-price auctions with resale: the case of many bidders.
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Abstract
If agents engage in resale, it changes bidding in the initial auction. Resale offers extra incentives for bidders with lower valuations to win the auction. However, if resale markets are not frictionless, then use values affect bidding incentives, and stronger bidders still win the initial auction more often than weaker ones. I consider a first price auction followed by a resale market with frictions, and con�rm the above statements. While intuitive, our results differ from the two bidder case of Hafalir and Krishna (2008): the two bidders win with equal probabilities regardless of their use values. The reason is that they face a common (resale) price at the relevant margin, a property that fails with more than two bidders. Numerical simulations show that asymmetry in winning probabilities increases in the number of bidders, and in large markets resale loses its e¤ect on allocations.
Item Type: | MPRA Paper |
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Original Title: | First-price auctions with resale: the case of many bidders |
Language: | English |
Keywords: | auction, resale |
Subjects: | D - Microeconomics > D4 - Market Structure, Pricing, and Design > D44 - Auctions |
Item ID: | 17094 |
Depositing User: | Gabor Virag |
Date Deposited: | 05 Sep 2009 07:16 |
Last Modified: | 02 Oct 2019 00:02 |
References: | [1] Cheng, H. and G. Tan (2009): "Auctions with Resale and Common Value", Mimeo, University of Southern California [2] Garratt, R. and T. Troger (2006): "Speculation in Standard Auctions with Resale," Econometrica, 74, 753-770. [3] Gupta, M. and B. Lebrun (1999): "First Price Auctions with Resale," Economics Letters, 64, 181-185. [4] Hafalir, I. and V. Krishna (2008): "Asymmetric Auctions with Resale " American Economic Review, 98, 87-112 [5] Hafalir, I. and V. Krishna (2008b): "Revenue and Efficiency E¤ects of Resale in First-Price Auctions", Forthcoming, Journal of Mathematical Economics [6] Lebrun, B. (1997): "First Price Auctions in the Asymmetric N Bidder Case", Les Cahiers de Recherche du GREEN (working paper series) #97-03 [7] Lebrun B. (2009): "First -Price, Second-Price and English Auctions with Resale", York University, Mimeo [8] Maskin, E. S. and J. G. Riley (2000): "Asymmetric Auctions", Review of Economic Studies, 67, 413-438 [9] Mylovanov, Tymo�y and Troger, Thomas (2006): "A Characterization of the Conditions for Optimal Auction with Resale," Working Paper, University of Bonn [10] Myerson, R. (1981): "Optimal Auction Design," Mathematics of Operations Research, 6, No. 1, 58-73. [11] Zheng, Charles (2002): "Optimal Auctions with Resale," Econometrica, 70, 2197-2224. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/17094 |