Speculation in First-Price Auctions with Resale
AbstractWe analyze first-price auctions with two asymmetric bidders, where the winner can offer the good for resale to the loser. One bidder has a private value for the good, the other bidder - the speculator - has zero value. We show that, independently of the resale market rules, the speculator's expected profit equals zero. Nevertheless, the opportunity for resale can create a role for an active speculator, destroy the efficiency of the auction, and increase the initial seller's expected revenue.
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Bibliographic InfoPaper provided by EconWPA in its series Microeconomics with number 0308001.
Date of creation: 04 Aug 2003
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first-price auction; speculation; resale;
Find related papers by JEL classification:
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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- Rod Garratt & Thomas Troger, 2003.
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Game Theory and Information
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