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Speculation in Second-Price Auctions with Resale

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  • Garratt, Rod
  • Troger, Thomas E

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, specu-lation can enhance the initial seller’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.

Suggested Citation

  • Garratt, Rod & Troger, Thomas E, 2003. "Speculation in Second-Price Auctions with Resale," University of California at Santa Barbara, Economics Working Paper Series qt0bj7w3z6, Department of Economics, UC Santa Barbara.
    • Handle: RePEc:cdl:ucsbec:qt0bj7w3z6
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    References listed on IDEAS

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    12. Thomas Troger, 2003. "Speculation in First-Price Auctions with Resale," Microeconomics 0308001, University Library of Munich, Germany.
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    Cited by:

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

    second-price auction; speculation; 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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