The impact of resale on entry in second price auctions
AbstractThis 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.
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Bibliographic InfoArticle provided by Elsevier in its journal Mathematical Social Sciences.
Volume (Year): 66 (2013)
Issue (Month): 2 ()
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Web page: http://www.elsevier.com/locate/inca/505565
Other versions of this item:
- Che, XiaoGang & Lee, Peter & Yang, Yibai, 2013. "The Impact of Resale on Entry in Second Price Auctions," Working Papers 2013-6, University of Alberta, Department of Economics.
- Che, XiaoGang & Lee, Peter & Yang, Yibai, 2013. "The Impact of Resale on Entry in Second Price Auctions," Working Papers 2013-07, University of Sydney, School of Economics.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
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