Auctions with Entry and Resale: The Case with Continuous Heterogeneous Entry Costs

We study how resale affects auctions with costly entry in a model where bidders possess twodimensional private information signals: entry costs and valuations. We establish the existence of symmetric entry equilibrium and identify sufficient conditions under which the equilibrium is unique. Our analysis suggests that the opportunity of resale induces motivation for both speculative entry and bargain hunting abstentions. By following a distribution family allowing for any degree of correlation between entry costs and valuations, we compare the equilibrium with resale to the equilibrium without resale. Our results suggest that while efficiency is always higher when resale is allowed, the implications for entry probability and expected revenue are ambiguous, which, in particular, depends on the reseller’s bargaining power in the resale stage.