IDEAS home Printed from https://ideas.repec.org/a/eee/matsoc/v101y2019icp6-19.html
   My bibliography  Save this article

Effects of resale in second-price auctions with private participation costs

Author

Listed:
  • Akyol, Ethem

Abstract

We consider second-price auctions with participation costs and investigate the effects of resale after an auction. There are two potential bidders whose valuations are commonly known. Bidders incur a privately known cost to participate in the auction. We examine how resale affects bidders’ entry behavior, seller’s expected revenue, and social welfare. We show that resale increases (decreases) entry by the lower-(higher-)value bidder, inducing a “more symmetric” equilibrium, and generates higher revenue for the seller. Furthermore, while resale may be detrimental to ex post welfare, it always increases the ex ante welfare.

Suggested Citation

  • Akyol, Ethem, 2019. "Effects of resale in second-price auctions with private participation costs," Mathematical Social Sciences, Elsevier, vol. 101(C), pages 6-19.
    • Handle: RePEc:eee:matsoc:v:101:y:2019:i:c:p:6-19
    DOI: 10.1016/j.mathsocsci.2019.06.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S016548961930040X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.mathsocsci.2019.06.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Tan, Guofu & Yilankaya, Okan, 2006. "Equilibria in second price auctions with participation costs," Journal of Economic Theory, Elsevier, vol. 130(1), pages 205-219, September.
    2. Hafalir, Isa & Krishna, Vijay, 2009. "Revenue and efficiency effects of resale in first-price auctions," Journal of Mathematical Economics, Elsevier, vol. 45(9-10), pages 589-602, September.
    3. Moldovanu, Benny & Sela, Aner, 2003. "Patent licensing to Bertrand competitors," International Journal of Industrial Organization, Elsevier, vol. 21(1), pages 1-13, January.
    4. Isa Hafalir & Vijay Krishna, 2008. "Asymmetric Auctions with Resale," American Economic Review, American Economic Association, vol. 98(1), pages 87-112, March.
    5. Celik, Gorkem & Yilankaya, Okan, 2017. "Resale in second-price auctions with costly participation," International Journal of Industrial Organization, Elsevier, vol. 54(C), pages 148-174.
    6. Rod Garratt & Thomas Tröger, 2006. "Speculation in Standard Auctions with Resale," Econometrica, Econometric Society, vol. 74(3), pages 753-769, May.
    7. Marco Pagnozzi, 2007. "Bidding to lose? Auctions with resale," RAND Journal of Economics, RAND Corporation, vol. 38(4), pages 1090-1112, December.
    8. Dirk Bergemann & Juuso Valimaki, 2002. "Information Acquisition and Efficient Mechanism Design," Econometrica, Econometric Society, vol. 70(3), pages 1007-1033, May.
    9. Cantillon, Estelle, 2008. "The effect of bidders' asymmetries on expected revenue in auctions," Games and Economic Behavior, Elsevier, vol. 62(1), pages 1-25, January.
    10. Green, Jerry & Laffont, Jean-Jacques, 1984. "Participation constraints in the vickrey auction," Economics Letters, Elsevier, vol. 16(1-2), pages 31-36.
    11. McAfee, R. Preston & McMillan, John, 1987. "Auctions with entry," Economics Letters, Elsevier, vol. 23(4), pages 343-347.
    12. Xu, Xiaoshu & Levin, Dan & Ye, Lixin, 2013. "Auctions with entry and resale," Games and Economic Behavior, Elsevier, vol. 79(C), pages 92-105.
    13. Gupta, Madhurima & Lebrun, Bernard, 1999. "First price auctions with resale," Economics Letters, Elsevier, vol. 64(2), pages 181-185, August.
    14. Levin, Dan & Smith, James L, 1994. "Equilibrium in Auctions with Entry," American Economic Review, American Economic Association, vol. 84(3), pages 585-599, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Akyol, Ethem, 2021. "Can resale harm the original seller in a second-price auction?," Economics Letters, Elsevier, vol. 203(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lorentziadis, Panos L., 2016. "Optimal bidding in auctions from a game theory perspective," European Journal of Operational Research, Elsevier, vol. 248(2), pages 347-371.
    2. Xu, Xiaoshu & Levin, Dan & Ye, Lixin, 2013. "Auctions with entry and resale," Games and Economic Behavior, Elsevier, vol. 79(C), pages 92-105.
    3. Celik, Gorkem & Yilankaya, Okan, 2017. "Resale in second-price auctions with costly participation," International Journal of Industrial Organization, Elsevier, vol. 54(C), pages 148-174.
    4. Che, XiaoGang & Lee, Peter & Yang, Yibai, 2013. "The impact of resale on entry in second price auctions," Mathematical Social Sciences, Elsevier, vol. 66(2), pages 163-168.
    5. Kaplan, Todd R. & Zamir, Shmuel, 2015. "Advances in Auctions," Handbook of Game Theory with Economic Applications,, Elsevier.
    6. Xiaogang Che & Tilman Klumpp, 2023. "Auctions versus sequential mechanisms when resale is allowed," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(4), pages 1207-1245, May.
    7. Loertscher, Simon & Marx, Leslie M., 2017. "Auctions with bid credits and resale," International Journal of Industrial Organization, Elsevier, vol. 55(C), pages 58-90.
    8. Isa Hafalir & Musab Kurnaz, 2019. "Discriminatory auctions with resale," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 173-189, December.
    9. Jingfeng Lu, 2009. "Why a Simple Second-Price Auction Induces Efficient Endogenous Entry," Theory and Decision, Springer, vol. 66(2), pages 181-198, February.
    10. Xiaoyong Cao & Guofu Tan & Guoqiang Tian & Okan Yilankaya, 2018. "Equilibria in second-price auctions with private participation costs," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(2), pages 231-249, March.
    11. Bernard Lebrun, 2008. "First-Price, Second-Price, and English Auctions with Resale," Working Papers 2008_06, York University, Department of Economics.
    12. Cao, Xiaoyong & Tian, Guoqiang, 2010. "Equilibria in first price auctions with participation costs," Games and Economic Behavior, Elsevier, vol. 69(2), pages 258-273, July.
    13. Bernard Lebrun, 2010. "First‐price auctions with resale and with outcomes robust to bid disclosure," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 165-178, March.
    14. Gábor Virág, 2013. "First-price auctions with resale: the case of many bidders," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(1), pages 129-163, January.
    15. Pagnozzi, Marco & Saral, Krista Jabs, 2013. "Multi-Object Auctions with Resale: An Experimental Analysis," MPRA Paper 43665, University Library of Munich, Germany.
    16. Moshe Babaioff & Nicole Immorlica & Yingkai Li & Brendan Lucier, 2021. "Making Auctions Robust to Aftermarkets," Papers 2107.05853, arXiv.org, revised Nov 2022.
    17. Nicola Branzoli & Francesco Decarolis, 2015. "Entry and Subcontracting in Public Procurement Auctions," Management Science, INFORMS, vol. 61(12), pages 2945-2962, December.
    18. Hafalir, Isa & Krishna, Vijay, 2009. "Revenue and efficiency effects of resale in first-price auctions," Journal of Mathematical Economics, Elsevier, vol. 45(9-10), pages 589-602, September.
    19. Diego Aycinena & Hernán Bejarano & Lucas Rentschler, 2018. "Informed entry in auctions," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(1), pages 175-205, March.
    20. Marco Pagnozzi, 2007. "Should Speculators Be Welcomed in Auctions?," CSEF Working Papers 176, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:matsoc:v:101:y:2019:i:c:p:6-19. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505565 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.