Speculation in Standard Auctions with Resale

Rod Garratt () and Thomas Troger ()

Microeconomics from EconWPA

Abstract: We analyze the role resale creates for zero-value bidders, called speculators, in standard auctions with symmetric independent private values buyers. English/second-price auctions always have equilibria with active resale markets and positive profits for a speculator. In first- price/Dutch auctions, the unique equilibrium can involve an active resale market, but is never profitable for a speculator. In all standard auctions, allowing resale can increase the initial seller's revenue and lead to an inefficient allocation. First-price and second-price auctions are not revenue equivalent.

Keywords: first-price; second-price; English; Dutch auctions; speculation; resale; efficiency (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Date: 2004-05-20
Note: Type of Document - pdf; pages: 52
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http://129.3.20.41/eps/mic/papers/0405/0405005.pdf (application/pdf)

Related works:
Working Paper: Speculation in Standard Auctions with Resale (2005)
Working Paper: Speculation in Standard Auctions with Resale (2005)
Journal Article: Speculation in Standard Auctions with Resale (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpmi:0405005

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