Efficiency in Auctions with (Failed) Resale

Marco Pagnozzi and Krista J. Saral

MPRA Paper from University Library of Munich, Germany

Abstract: We analyze how the possibility of resale affects efficiency in multi-object uniform-price auctions with asymmetric bidders using a combination of theory and experiments. The resale market is modeled as an unstructured bargaining game between auction bidders. Our experimental design consists of four treatments that vary the (exogenous) probability that bidders participate in a resale market after the auction. In all treatments, the possibility of resale increases efficiency after the auction, but it also induces demand reduction by high-value bidders during the auction, which reduces auction efficiency. In contrast to what is usually argued, resale does not necessarily increase final efficiency. When there is a low probability of a resale market, final efficiency is actually lower than in an auction without resale.

Keywords: efficiency; multi-object auctions; resale; asymmetric bidders; bargaining; economic experiments (search for similar items in EconPapers)
JEL-codes: C9 D44 (search for similar items in EconPapers)
Date: 2015-04-27
New Economics Papers: this item is included in nep-exp and nep-mic
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: Efficiency in auctions with (failed) resale (2019)
Working Paper: Efficiency in Auctions with (Failed) Resale (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:63962

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