Auctions with Resale and Bargaining Power

We establish the bid-equivalence between an independent private-value (IPV) …rst-price auction model with resale and a model of …rst-price common-value auction, when the resale market satis…es a minimal ef…ciency property and the common value is de…ned by the transaction price. With an application of the Coase Theorem, we show two polar cases in which auctions with resale have opposite properties. We examine the e¤ects of bargaining power on the revenue and e¢ ciency of …rst-price auctions with resale. This is done for three types of bargaining models: (a) bargaining with commitment, (b) bargaining with delay costs, and (c) k-double auctions resale market. We also provide conditions under which the …rst-price auction generates higher revenue than the second-price auction when resale is allowed. Please contact Harrison Cheng at [email protected] and Guofu Tan at [email protected] for comments and further suggestions.