Asymmetric wheat auctions with resale and partially divisible bidding objects

This study examines asymmetric wheat auctions, with an object that is indivisible at the bidding stage, but divisible at the resale stage. Two bidders compete on auction. One is a large-sized miller, who can process the object being auctioned, and the other is a small-sized miller, who can only process part of the object. We show that this auction has a monotone equilibrium, and that the seller's expected revenue in the second-price auction is strictly larger than that in the first-price auction. Moreover, we develop a threshold as a criterion for the small-sized miller's speculating behavior on auction.