Speculation in Second-Price Auctions with Resale
This paper contributes to the literature on second-price auctions with resale. We add speculatorsâ€”bidders with value zeroâ€”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, specu-lation can enhance the initial sellerâ€™s expected revenue. On the other hand, speculation can harm the initial seller even if she commits to an optimal reserve price. Our results are valid for English auctions as well.
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