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Optimal Auction with Resale

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Author Info
Charles Zhoucheng Zheng () (Northwestern University)
Abstract

This paper investigates the design of seller-optimal auctions when winning bidders can attempt to resell the good. In that case, the optimal allocation characterized by Myerson (1981) cannot be achieved without resale. I find a sufficient and necessary condition for sincere bidding given the possibility of resale. In two-bidder cases, I prove that the Myerson allocation can be achieved under standard conditions supplemented with two assumptions. With three or more bidders, achieving the Myerson allocation is more difficult. I prove that it can be implemented in special cases. In those cases, the Myerson allocation is generated through a sequence of resale auctions, each optimally chosen by a reseller. Copyright The Econometric Society 2002.

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Article provided by Econometric Society in its journal Econometrica.

Volume (Year): 70 (2002)
Issue (Month): 6 (November)
Pages: 2197-2224
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Handle: RePEc:ecm:emetrp:v:70:y:2002:i:6:p:2197-2224

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  1. Hannu Vartiainen, 2009. "Auction Design without Commitment," Discussion Papers 44, Aboa Centre for Economics. [Downloadable!]
    Other versions:
  2. Vasiliki Skreta, 2003. "Optimal Auction Design under Non-Commitment," Levine's Bibliography 506439000000000176, UCLA Department of Economics. [Downloadable!]
  3. Marco Pagnozzi, 2004. "Bidding to Lose? Auctions with Resale," CSEF Working Papers 116, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
  4. Alexander Matros & Andriy Zapechelnyuk, 2008. "Optimal fees in internet auctions," Review of Economic Design, Springer, vol. 12(3), pages 155-163, September. [Downloadable!] (restricted)
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  5. Marco Pagnozzi, 2007. "Resale and Bundling in Auctions," CSEF Working Papers 186, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
  6. Tymofiy Mylovanov & Thomas Tröger, 2009. "Optimal auction with resale—a characterization of the conditions," Economic Theory, Springer, vol. 40(3), pages 509-528, September. [Downloadable!] (restricted)
  7. Vasiliki Skreta, 2005. "Optimal Auction Design under Non-Commitment," UCLA Economics Online Papers 346, UCLA Department of Economics. [Downloadable!]
  8. Rod Garratt & Thomas Troger, 2003. "Speculation in Second-Price Auctions with Resale," University of California at Santa Barbara, Economics Working Paper Series wp4-03, Department of Economics, UC Santa Barbara. [Downloadable!]
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  9. Marco Pagnozzi, 2007. "Should Speculators Be Welcomed in Auctions?," CSEF Working Papers 176, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
  10. Vasiliki Skreta, 2008. "Optimal Auction Design Under Non-Commitment," Working Papers 08-14, New York University, Leonard N. Stern School of Business, Department of Economics. [Downloadable!]
  11. Alexander Matros & Andriy Zapechelnyuk, 2006. "Optimal Mechanisms for an Auction Mediator," Working Papers 202, University of Pittsburgh, Department of Economics, revised Jan 2006. [Downloadable!]
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  12. Stephanie Rosenkranz & Patrick W. Schmitz, 2005. "Reserve prices in auctions as reference points," Bonn Econ Discussion Papers bgse24_2005, University of Bonn, Germany. [Downloadable!]
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  13. Yeon-Koo Che & Jinwoo Kim, 2005. "Robustly collusion-proof implementation," Discussion Papers 0506-12, Columbia University, Department of Economics. [Downloadable!]
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  14. Giacomo Calzolari & Alessandro Pavan, 2003. "Monopoly with Resale," Working Papers 2003.20, Fondazione Eni Enrico Mattei. [Downloadable!]
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  15. Alessandro Pavan, 2004. "On the Optimality of Privacy in Sequential Contracting," Theory workshop papers 658612000000000067, UCLA Department of Economics. [Downloadable!]
    Other versions:
  16. Charles A. Holt & William Shobe & Dallas Burtraw & Karen Palmer & Jacob K. Goeree, 2007. "Auction Design for Selling CO2 Emission Allowances Under the Regional Greenhouse Gas Initiative," Reports 2007-03, Center for Economic and Policy Studies. [Downloadable!]
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