Asymmetric Auctions with Resale

TLDR

The paper investigates first‑ and second‑price auctions with resale under independent private values. The model assumes asymmetric bidders and post‑auction resale via monopoly pricing, where the winner offers a take‑it‑or‑leave‑it deal to the loser. The study finds that a first‑price auction with resale has a unique monotonic equilibrium and yields higher expected revenue than a second‑price auction, enabling a general revenue ranking not possible without resale. JEL classification: D44.

Abstract

We study first- and second-price auctions with resale in a model with independent private values. With asymmetric bidders, the resulting inefficiencies create a motive for post-auction trade which, in our model, takes place via monopoly pricing—the winner makes a take-it-or-leave-it offer to the loser. We show (a) a first-price auction with resale has a unique monotonic equilibrium; and (b) with resale, the expected revenue from a first-price auction exceeds that from a second-price auction. The inclusion of resale possibilities thus permits a general revenue ranking of the two auctions that is not available when these are excluded. (JEL D44)