Discriminatory price auctions with resale and optimal quantity caps

Brian Baisa () and Justin Burkett

Theoretical Economics, 2020, vol. 15, issue 1

Abstract: We present a model of a discriminatory price auction in which a large bidder competes against many small bidders, followed by a post-auction resale stage in which the large bidder is endogenously determined to be a buyer or a seller. We extend results on first-price auctions with resale to this setting and use these results to give a tractable characterization of equilibrium behavior. We use this characterization to study the policy of capping the amount that may be won by large bidders in the auction, a policy that has received little attention in the auction literature. Our analysis shows that the trade-offs involved when adjusting these quantity caps can be understood in terms familiar to students of asymmetric first-price single-unit auctions. Furthermore, whether one seeks to maximize welfare or revenue can have contradictory implications for the choice of cap.

Keywords: Multi-unit auctions; resale; quantity caps (search for similar items in EconPapers)
JEL-codes: D42 D44 D47 D82 (search for similar items in EconPapers)
Date: 2020-02-03
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Citations: View citations in EconPapers (3)

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