Inefficient Equilibria of Second-Price/English Auctions with Resale
نویسندگان
چکیده
In second-price or English auctions involving symmetric, independent, private-value bidders the equilibrium outcome may not be efficient if resale is allowed. In addition to the efficient, symmetric equilibrium there exist inefficient, asymmetric equilibria in which the bidder who wins the item offers it for resale to the losers. For the case where the reserve price in the initial auction equals zero, we show that any surplus between the first best and that of a market where one bidder is a monopolist seller is supported by an equilibrium in undominated strategies. In addition, we show that an efficiency-minded seller may find it optimal to set a positive reserve price.
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