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Asymmetric Auctions with Resale

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Author Info
Isa Hafalir
Vijay Krishna
Abstract

We study first- and second-price auctions with resale in a model with independent private values. With asymmetric bidders, the resulting ineffi ciencies create a motive for post-auction trade which, in our model, takes place via monopoly pricing -- the winner makes a take-it-or-leave-it offer to the loser. We show (a) a first-price auction with resale has a unique monotonic equilibrium; and (b) with resale, the expected revenue from a first-price auction exceeds that from a second-price auction. The inclusion of resale possibilities thus permits a general revenue ranking of the two auctions that is not available when these are excluded. (JEL D44)

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File URL: http://hdl.handle.net/10.1257/aer.98.1.87
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File URL: http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=98&issue=1&article=4&issue_date=March2008
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 98 (2008)
Issue (Month): 1 (March)
Pages: 87-112
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Handle: RePEc:aea:aecrev:v:98:y:2008:i:1:p:87-112

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  1. Bernard Lebrun, 2008. "First-Price, Second-Price, and English Auctions with Resale," Working Papers 2008_06, York University, Department of Economics. [Downloadable!]
  2. Virag, Gabor, 2009. "First-price auctions with resale: the case of many bidders," MPRA Paper 17094, University Library of Munich, Germany. [Downloadable!]
  3. Giuseppe Dari-Mattiacci & Sander Onderstal & Francesco Parisi, 2009. "Seeking rents in the shadow of Coase," Public Choice, Springer, vol. 139(1), pages 171-196, April. [Downloadable!] (restricted)
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  4. Hannu Vartiainen, 2009. "Auction Design without Commitment," Discussion Papers 44, Aboa Centre for Economics. [Downloadable!]
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  5. Thomas Tröger & Tymofiy Mylovanov, 2008. "Optimal Auction Design and Irrelevance of Private Information," Bonn Econ Discussion Papers bgse21_2008, University of Bonn, Germany. [Downloadable!]
  6. Yong Sui, 2009. "Rent-seeking contests with private values and resale," Public Choice, Springer, vol. 138(3), pages 409-422, March. [Downloadable!] (restricted)
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