Speculation in Standard Auctions with Resale

Rodney Garratt and Thomas Tröger
Authors registered in the RePEc Author Service: Thomas Troeger

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: In standard auctions with symmetric, independent private value bidders resale creates a role for a speculator—a bidder who is commonly known to have no use value for the good on sale. For second-price and English auctions the efficient value-bidding equilibrium coexists with a continuum of inefficient equilibria in which the speculator wins the auction and makes positive profits. First-price and Dutch auctions have an essentially unique equilibrium, and whether or not the speculator wins the auction and distorts the final allocation depends on the number of bidders, the value distribution, and the discount factor. Speculators do not make profits in first-price or Dutch auctions.

Keywords: standard auctions; speculation; resale; efficiency (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Date: 2005-05
New Economics Papers: this item is included in nep-com and nep-mic
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Speculation in Standard Auctions with Resale (2006)
Working Paper: Speculation in Standard Auctions with Resale (2005)
Working Paper: Speculation in Standard Auctions with Resale (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:42

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