Speculation in First-Price Auctions with Resale
We 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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"Speculation in Second-Price Auctions with Resale,"
University of California at Santa Barbara, Economics Working Paper Series
qt0bj7w3z6, Department of Economics, UC Santa Barbara.
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