Affiliation:
1. Department of Economics University of International Business and Economics Beijing China
2. School of International Trade and Economics University of International Business and Economics Beijing China
Abstract
AbstractThis paper investigates the effects of resale on bidders' entry decisions, social welfare, and seller's expected revenue in a second‐price auction with two‐dimensional private information on values and participation costs. We establish the existence of symmetric entry equilibrium and identify sufficient conditions under which the equilibrium is unique. We show that when resale is allowed, the low‐cost bidders become more aggressive on entry, while the high‐cost bidders are less likely to enter. Furthermore, our analysis also suggests resale allowance can increase the social welfare under a sufficient condition, which depends on the magnitude of bargaining power, and its effect on expected revenue is ambiguous.
Funder
National Natural Science Foundation of China
Subject
Management of Technology and Innovation,Management Science and Operations Research,Strategy and Management,Business and International Management