Elsevier

Journal of Economic Theory

Volume 145, Issue 5, September 2010, Pages 2037-2043
Journal of Economic Theory

Notes
Revenue ranking of first-price auctions with resale

https://doi.org/10.1016/j.jet.2010.04.002Get rights and content

Abstract

When the price setter in post-auction resale is chosen according to exogenous probabilities, Hafalir and Krishna (2008) [2] showed that the first-price auction brings more expected revenues than the second-price auction with truth-bidding bidders. We complete their revenue ranking by proving that the first-price auction produces higher expected revenues the higher the probability the auction winner sets the resale price.

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Cited by (7)

  • Auctions with bid credits and resale

    2017, International Journal of Industrial Organization
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    To the best of our knowledge, ours is the first paper to relate resale to auctions that are inefficient because of bid credits. Two of the most closely related papers are Hafalir and Krishna (2008) and Lebrun (2010b), which analyze auctions with resale. We adapt Lebrun’s (2010b) representation of the resale game of Hafalir and Krishna (2008), in which the winner makes a take-it-or-leave-it offer to the loser with some probability and the loser makes a take-it-or-leave-it offer with the complementary probability.

  • Resale in second-price auctions with costly participation

    2017, International Journal of Industrial Organization
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    New bidders or more information to existing bidders may arrive between the initial auction and the resale stage (Bikhchandani and Huang, 1989; Haile, 1996; 2003; Bose and Deltas, 2006). Bidder asymmetries may also cause inefficiencies in first-price auctions (Gupta and Lebrun, 1999; Hafalir and Krishna, 2008; Cheng and Tan, 2010; Lebrun, 2010a; Virág, 2013) and in optimal auctions maximizing the seller’s revenue (Zheng, 2002).5 In second-price and English auctions, even when resale is allowed, (use) value-bidding remains to be an equilibrium (see, for example, Haile (1996)).

  • Advances in Auctions

    2015, Handbook of Game Theory with Economic Applications
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    In Haile (2003), the reason motivating a resale is not the inefficiency in the primary auction but rather information gained afterwards. Additional contributions of note are Bose and Deltas (2007), Pagnozzi (2007 2009), Harfalir and Krishna (2009), Cheng and Tan (2010), Lebrun (2010a, 2010b), Cheng (2011), Che et al. (2013), Virág (2013), and Xu et al. (2013). Finally, we note new work on an environment in which the seller cannot commit to not reattempt to sell the object if he fails to do so in the auction (see Vartiainen, 2013, and Skreta, 2013).

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The Social Sciences and Humanities Research Council of Canada provided financial support for this research.

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