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Auctions With Resale Opportunities: An Experimental Study

Author

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  • Chintamani Jog
  • Georgia Kosmopoulou

Abstract

We study first price asymmetric private value auctions with resale opportunities presented in seller's and buyer's markets. We offer experimental evidence on bidding behavior, prices, and resource allocation. Building upon the Hafalir and Krishna (2008) model, we find that bidders will bid higher in an auction if the resale market is a seller's market than a buyer's market. There is a price/revenue‐efficiency trade‐off established theoretically between these two resale regimes. In equilibrium, however, final efficiency is high irrespective of the resale market structure. Evidence of bid symmetrization and higher final efficiency is found in the buyer‐advantaged resale case. (JEL D44, C92)

Suggested Citation

  • Chintamani Jog & Georgia Kosmopoulou, 2015. "Auctions With Resale Opportunities: An Experimental Study," Economic Inquiry, Western Economic Association International, vol. 53(1), pages 624-639, January.
    • Handle: RePEc:bla:ecinqu:v:53:y:2015:i:1:p:624-639
    DOI: 10.1111/ecin.12120
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    References listed on IDEAS

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    Cited by:

    1. Pagnozzi, Marco & Saral, Krista J., 2019. "Efficiency in auctions with (failed) resale," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 254-273.
    2. Marco Pagnozzi & Krista J. Saral, 2019. "Entry by successful speculators in auctions with resale," Experimental Economics, Springer;Economic Science Association, vol. 22(2), pages 477-505, June.
    3. Pagnozzi, Marco & Saral, Krista J., 2019. "Auctions with limited liability through default or resale," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 51-74.
    4. Marco Pagnozzi & Krista J. Saral, 2015. "Demand Reduction in Multi-Object Auctions with Resale: An Experimental Analysis," CSEF Working Papers 416, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    5. Klenio Barbosa & Dakshina G. De Silva & Liyu Yang & Hisayuki Yoshimoto, 2026. "Bond Losses in Post‐Auction Resale Markets: Causes and Consequences," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 31(1), pages 1131-1155, January.

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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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