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Speculation in Second-Price Auctions with Resale

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Author Info
Rod Garratt (University of California Santa Barbara)
Thomas Troger (University of California Santa Barbara)

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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.

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Publisher Info
Paper provided by EconWPA in its series Game Theory and Information with number 0305003.

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Date of creation: 30 May 2003
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Handle: RePEc:wpa:wuwpga:0305003

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Web page: http://129.3.20.41

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Related research
Keywords: speculation; second-price auction; resale;

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Find related papers by JEL classification:
C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Paul Milgrom & Ilya Segal, 2002. "Envelope Theorems for Arbitrary Choice Sets," Econometrica, Econometric Society, vol. 70(2), pages 583-601, March. [Downloadable!] (restricted)
  2. Edlin, Aaron S. & Shannon, Chris, 1998. "Strict Monotonicity in Comparative Statics," Journal of Economic Theory, Elsevier, vol. 81(1), pages 201-219, July. [Downloadable!] (restricted)
    Other versions:
  3. repec:att:wimass:19199933 is not listed on IDEAS
  4. Charles Zhoucheng Zheng, 2002. "Optimal Auction with Resale," Econometrica, Econometric Society, vol. 70(6), pages 2197-2224, November. [Downloadable!] (restricted)
  5. Ken Binmore & Larry Samuelson, . "Evolutionary Drift and Equilibrium Selection," ELSE working papers 011, ESRC Centre on Economics Learning and Social Evolution. [Downloadable!]
  6. Roger B. Myerson, 1978. "Optimal Auction Design," Discussion Papers 362, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  7. McAfee, R. Preston & Vincent, Daniel, 1997. "Sequentially Optimal Auctions," Games and Economic Behavior, Elsevier, vol. 18(2), pages 246-276, February. [Downloadable!] (restricted)
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  8. 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. [Downloadable!] (restricted)
  9. Ken Binmore & Larry Samuelson, . "Evolutionary Drift And Equilibrium Selection," ELSE working papers 049, ESRC Centre on Economics Learning and Social Evolution.
  10. Lawrence M. Ausubel & Peter Cramton, 1998. "The Optimality of Being Efficient," Papers of Peter Cramton 98wpoe, University of Maryland, Department of Economics - Peter Cramton, revised 18 Jun 1999. [Downloadable!]
  11. Haile, Philip A., 2003. "Auctions with private uncertainty and resale opportunities," Journal of Economic Theory, Elsevier, vol. 108(1), pages 72-110, January. [Downloadable!] (restricted)
  12. Jehiel, Philippe & Moldovanu, Benny, 1999. "Resale Markets and the Assignment of Property Rights," Review of Economic Studies, Blackwell Publishing, vol. 66(4), pages 971-91, October. [Downloadable!] (restricted)
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  13. Giacomo Calzolari & Alessandro Pavan, 2005. "Monopoly with Resale," Discussion Papers 1405, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Rod Garratt & Thomas Troger, 2004. "Speculation in Standard Auctions with Resale," Microeconomics 0405005, EconWPA. [Downloadable!]
    Other versions:
  2. Marco Pagnozzi, 2004. "Bidding to Lose? Auctions with Resale," CSEF Working Papers 116, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
  3. Thomas Troger, 2003. "Speculation in First-Price Auctions with Resale," Microeconomics 0308001, EconWPA. [Downloadable!]
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