Asymmetric auctions with resale

Isa Hafalir, Vijay Krishna

Research output: Contribution to journalArticle

62 Scopus citations

Abstract

We study first- and second-price auctions with resale in a model with independent private values. With asymmetric bidders, the resulting inefficiencies create a motive for post-auction trade which, in our model, takes place via monopoly pricing - the winner makes a take-it-or-leave-it offer to the loser. We show (a) a first-price auction with resale has a unique monotonic equilibrium; and (b) with resale, the expected revenue from a first-price auction exceeds that from a second-price auction. The inclusion of resale possibilities thus permits a general revenue ranking of the two auctions that is not available when these are excluded.

Original languageEnglish (US)
Pages (from-to)87-112
Number of pages26
JournalAmerican Economic Review
Volume98
Issue number1
DOIs
StatePublished - Mar 2008

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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