Speculation in First-Price Auctions with Resale

Thomas Troger
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Thomas Troger: University of California Santa Barbara

Microeconomics from University Library of Munich, Germany

Abstract: We analyze first-price auctions with two asymmetric bidders, where the winner can offer the good for resale to the loser. One bidder has a private value for the good, the other bidder - the speculator - has zero value. We show that, independently of the resale market rules, the speculator's expected profit equals zero. Nevertheless, the opportunity for resale can create a role for an active speculator, destroy the efficiency of the auction, and increase the initial seller's expected revenue.

Keywords: first-price auction; speculation; resale (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2003-08-04
Note: Type of Document -
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpmi:0308001

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