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The Impact of Resale on 2-Bidder First-Price Auctions where One Bidder?s Value is Commonly Known

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  • Tröger, Thomas

Abstract

We consider 2-bidder first-price auctions where one bidder's value is commonly known. Such auctions induce an ineffcient allocation. We show that a resale opportunity, where the auction winner can make a take-it-or-leave-it offer to the loser, increases (reduces) the ineffciency of the market when the buyer with the commonly known value is weak (strong). Resale always reduces all bidders' payoffs and increases the initial seller's revenue.

Suggested Citation

  • Tröger, Thomas, 2004. "The Impact of Resale on 2-Bidder First-Price Auctions where One Bidder?s Value is Commonly Known," Bonn Econ Discussion Papers 25/2004, University of Bonn, Bonn Graduate School of Economics (BGSE).
    • Handle: RePEc:zbw:bonedp:252004
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    References listed on IDEAS

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    More about this item

    Keywords

    asymmetric first-price auctions; resale; efficiency;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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