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Speculation in Second-Price Auctions with Resale

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Author Info

  • Rod Garratt

    (University of California Santa Barbara)

  • Thomas Troger

    (University of California Santa Barbara)

Abstract

This paper contributes to the literature on second-price auctions with resale. We add speculators---bidders with value zero---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, speculation can enhance the initial seller's expected revenue. On the other hand, speculation can harm the initial seller even if she chooses an optimal reserve price. Our results are valid for English auctions as well.

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File URL: http://128.118.178.162/eps/game/papers/0305/0305003.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Game Theory and Information with number 0305003.

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Date of creation: 30 May 2003
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Handle: RePEc:wpa:wuwpga:0305003

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Web page: http://128.118.178.162

Related research

Keywords: speculation; second-price auction; resale;

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References

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  1. Haile, Philip A., 2000. "Partial Pooling at the Reserve Price in Auctions with Resale Opportunities," Games and Economic Behavior, Elsevier, vol. 33(2), pages 231-248, November.
  2. Haile,P.A., 1999. "Auctions with resale," Working papers 33, Wisconsin Madison - Social Systems.
  3. Haile, Philip A., 2003. "Auctions with private uncertainty and resale opportunities," Journal of Economic Theory, Elsevier, vol. 108(1), pages 72-110, January.
  4. Giacomo Calzolari & Alessandro Pavan, 2004. "Monopoly with Resale," Discussion Papers 1393, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Aaron S. Edlin and Chris Shannon., 1995. "Strict Monotonicity in Comparative Statics," Economics Working Papers 95-238, University of California at Berkeley.
  6. Charles Zhoucheng Zheng, 2002. "Optimal Auction with Resale," Econometrica, Econometric Society, vol. 70(6), pages 2197-2224, November.
  7. Paul Milgrom & Ilya Segal, 2002. "Envelope Theorems for Arbitrary Choice Sets," Econometrica, Econometric Society, vol. 70(2), pages 583-601, March.
  8. Jehiel, Philippe & Moldovanu, Benny, 1999. "Resale Markets and the Assignment of Property Rights," Review of Economic Studies, Wiley Blackwell, vol. 66(4), pages 971-91, October.
  9. Binmore, Ken & Samuelson, Larry, 1999. "Evolutionary Drift and Equilibrium Selection," Review of Economic Studies, Wiley Blackwell, vol. 66(2), pages 363-93, April.
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Citations

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Cited by:
  1. Thomas Troger, 2003. "Speculation in First-Price Auctions with Resale," Microeconomics 0308001, EconWPA.
  2. 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, revised 01 Nov 2006.
  3. Garratt, Rod & Tröger, Thomas, 2005. "Speculation in Standard Auctions with Resale," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 42, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

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