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Download the Paper (307 K, PDF file) - April 28, 2003 Tell a colleague about it. Printing Tips: Select 'print as image' in the Acrobat print dialog if you have trouble printing.

ABSTRACT:
This paper contributes to the literature on second-price auctions with resale. We add speculators—bidders with value zero—to the standard symmetric independent private values environment. There always exists a continuum of inefficient equilibria that are profitable for a speculator. With no reserve price in the initial auction, specu-lation can enhance the initial seller’s expected revenue. On the other hand, speculation can harm the initial seller even if she commits to an optimal reserve price. Our results are valid for English auctions as well.

SUGGESTED CITATION:
Rod Garratt and Thomas E. Troger, "Speculation in Second-Price Auctions with Resale" (April 28, 2003). Department of Economics, UCSB. Departmental Working Papers. Paper wp4-03.
http://repositories.cdlib.org/ucsbecon/dwp/wp4-03