First-price auctions with resale: the case of many bidders

Virág, Gábor

First-price auctions with resale: the case of many bidders

MPRA Paper from University Library of Munich, Germany

Abstract: If agents engage in resale, it changes bidding in the initial auction. Resale offers extra incentives for bidders with lower valuations to win the auction. However, if resale markets are not frictionless, then use values affect bidding incentives, and stronger bidders still win the initial auction more often than weaker ones. I consider a first price auction followed by a resale market with frictions, and con�rm the above statements. While intuitive, our results differ from the two bidder case of Hafalir and Krishna (2008): the two bidders win with equal probabilities regardless of their use values. The reason is that they face a common (resale) price at the relevant margin, a property that fails with more than two bidders. Numerical simulations show that asymmetry in winning probabilities increases in the number of bidders, and in large markets resale loses its e¤ect on allocations.

Keywords: auction; resale (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-com, nep-exp and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: First-price auctions with resale: the case of many bidders (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:17094

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