Resale in Second-Price Auctions with Costly Participation

Gorkem Celik and Okan Yilankaya

Koç University-TUSIAD Economic Research Forum Working Papers from Koc University-TUSIAD Economic Research Forum

Abstract: We investigate efficiency properties of sealed-bid second-price auctions with costly participation and resale. Each bidder chooses to participate in the auction if her valuation is higher than her optimally chosen participation cutoff. If resale is not allowed and the bidder valuations are drawn from a strictly convex distribution function, the symmetric equilibrium (where all bidders use the same cutoff) is less efficient than a class of two-cutoff asymmetric equilibria. Existence of these equilibria without resale is sufficient for existence of similarly constructed two-cutoff equilibria with resale. Moreover, these equilibria with resale are more asymmetric and (under a sufficient condition) more efficient than the corresponding equilibria without resale.

Keywords: Second-price auctions; resale; participation cost; endogenous entry; endogenous valuations (search for similar items in EconPapers)
JEL-codes: C72 D44 D82 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2015-01
New Economics Papers: this item is included in nep-com, nep-cta, nep-gth and nep-mic
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http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1501.pdf (application/pdf)

Related works:
Journal Article: Resale in second-price auctions with costly participation (2017)
Working Paper: Resale in Second-Price Auctions with Costly Participation (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:koc:wpaper:1501

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