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Resale and bundling in auctions

  • Pagnozzi, Marco

The possibility of resale increases bidders' incentives to jointly reduce demand in multi-object auctions, because resale increases low-value bidders' willingness to pay and reduces high-value bidders' willingness to pay. Therefore, resale may reduce the seller's revenue. In a simple model with complete information, however, allowing resale and bundling the objects on sale are "complement strategies" for the seller (under reasonable conditions)--by bundling and allowing resale the seller earns a higher revenue than by selling the objects separately and/or forbidding resale. We also show why allowing resale may reduce efficiency.

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Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 27 (2009)
Issue (Month): 6 (November)
Pages: 667-678

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Handle: RePEc:eee:indorg:v:27:y:2009:i:6:p:667-678
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505551

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