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The Impact of Resale on Entry in Second Price Auctions

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

No 2013-07, Working Papers from University of Sydney, School of Economics

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.

Keywords: resale; sequential entry; costly participation; Second price auctions (search for similar items in EconPapers)
Date: 2013-04
New Economics Papers: this item is included in nep-com, nep-cta and nep-mic
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Journal Article: 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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