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The impact of resale on entry in second price auctions

XiaoGang Che (), Peter Lee and Yibai Yang ()

Mathematical Social Sciences, 2013, vol. 66, issue 2, 163-168

Abstract: This paper investigates the effect of resale allowance on entry strategies in a second price auction with two bidders whose entries are sequential and costly. We first characterize the perfect Bayesian equilibrium in cutoff strategies. We then show that there exists a unique threshold such that if the reseller’s bargaining power is greater (less) than the threshold, resale allowance causes the leading bidder (the following bidder) to have a higher (lower) incentive on entry; i.e., the cutoff of entry becomes lower (higher). We also discuss asymmetric bidders and the original seller’s expected revenue.

Date: 2013
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Working Paper: The Impact of Resale on Entry in Second Price Auctions (2013) Downloads
Working Paper: The Impact of Resale on Entry in Second Price Auctions (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:66:y:2013:i:2:p:163-168

DOI: 10.1016/j.mathsocsci.2013.04.002

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