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 InfoPaper provided by University of Sydney, School of Economics in its series Working Papers with number 2013-07.
Date of creation: Apr 2013
Date of revision:
resale; sequential entry; costly participation; Second price auctions;
Other versions of this item:
- Che, XiaoGang & Lee, Peter & Yang, Yibai, 2013. "The impact of resale on entry in second price auctions," Mathematical Social Sciences, Elsevier, vol. 66(2), pages 163-168.
- 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.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-20 (All new papers)
- NEP-COM-2013-04-20 (Industrial Competition)
- NEP-CTA-2013-04-20 (Contract Theory & Applications)
- NEP-MIC-2013-04-20 (Microeconomics)
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