Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/22916
Authors: 
Garratt, Rod
Tröger, Thomas
Year of Publication: 
2005
Series/Report no.: 
Bonn econ discussion papers 2005,10
Abstract: 
In standard auctions with symmetric, independent private value bidders resale creates a role for a speculator?a bidder who is commonly known to have no use value for the good on sale. For second-price and English auctions the efficient value-bidding equilibrium coexists with a continuum of inefficient equilibria in which the speculator wins the auction and makes positive profits. First-price and Dutch auctions have an essentially unique equilibrium, and whether or not the speculator wins the auction and distorts the final allocation depends on the number of bidders, the value distribution, and the discount factor. Speculators do not make profits in first-price or Dutch auctions.
Subjects: 
standard auctions
speculation
resale
efficiency
JEL: 
D44
Document Type: 
Working Paper

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