Article ID Journal Published Year Pages File Type
5078238 International Journal of Industrial Organization 2009 12 Pages PDF
Abstract

The possibility of resale increases bidders' incentives to jointly reduce demand in multi-object auctions, because resale increases low-value bidders' willingness to pay and reduces high-value bidders' willingness to pay. Therefore, resale may reduce the seller's revenue. In a simple model with complete information, however, allowing resale and bundling the objects on sale are “complement strategies” for the seller (under reasonable conditions)-by bundling and allowing resale the seller earns a higher revenue than by selling the objects separately and/or forbidding resale. We also show why allowing resale may reduce efficiency.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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