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Speculation in Second-Price Auctions with Resale

Author

Listed:
  • 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.

Suggested Citation

  • Rod Garratt & Thomas Troger, 2003. "Speculation in Second-Price Auctions with Resale," Game Theory and Information 0305003, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpga:0305003
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    References listed on IDEAS

    as
    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.
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    7. Ken Binmore & Larry Samuelson, "undated". "Evolutionary Drift And Equilibrium Selection," ELSE working papers 049, ESRC Centre on Economics Learning and Social Evolution.
    8. Giacomo Calzolari & Alessandro Pavan, 2006. "Monopoly with resale," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 362-375, June.
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    13. Ausubel, Lawrence M & Deneckere, Raymond J, 1989. "Reputation in Bargaining and Durable Goods Monopoly," Econometrica, Econometric Society, vol. 57(3), pages 511-531, May.
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    16. Thomas Troger, 2003. "Speculation in First-Price Auctions with Resale," Microeconomics 0308001, University Library of Munich, Germany.
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    Cited by:

    1. Rod Garratt & Thomas Tröger, 2006. "Speculation in Standard Auctions with Resale," Econometrica, Econometric Society, vol. 74(3), pages 753-769, May.
    2. Marco Pagnozzi, 2007. "Bidding to lose? Auctions with resale," RAND Journal of Economics, RAND Corporation, vol. 38(4), pages 1090-1112, December.
    3. Thomas Troger, 2003. "Speculation in First-Price Auctions with Resale," Microeconomics 0308001, University Library of Munich, Germany.

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    More about this item

    Keywords

    speculation; second-price auction; resale;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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