Speculation in Second-Price Auctions with Resale
AbstractThis paper contributes to the literature on second-price auctions with resale. We add speculatorsâ€”bidders with value zeroâ€”to the standard symmetric independent private values environment. There always exists a continuum of inefficient equilibria that are profitable for a speculator. With no reserve price in the initial auction, specu-lation can enhance the initial sellerâ€™s expected revenue. On the other hand, speculation can harm the initial seller even if she commits to an optimal reserve price. Our results are valid for English auctions as well.
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Bibliographic InfoPaper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number qt0bj7w3z6.
Date of creation: 28 Apr 2003
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second-price auction; speculation; resale;
Other versions of this item:
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
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