Auctions versus Sequential Mechanisms When Resale is Allowed∗

We examine the impacts of resale opportunity on entry and bidding strategies in simultaneous bidding process (auction mechanism) and sequential bidding process (sequential mechanism) with costly entry, and relative performance between the two mechanisms. Resale opportunity reinforces the partial-pooling equilibrium that a bidder submits a jump bid (even higher than his value) to deter following entry. In equilibrium, the sequential mechanism is still more efficient. We then identify sufficient conditions if the participation cost is sufficiently small and sufficiently large number of potential buyers exists under which the sequential mechanism gives higher expected seller revenue. We finally discuss robustness of our results under other resale environments.