Equilibrium and Welfare Analysis in Second-Price Auctions with Resale and Costly Entry. (31st October 2022)

• Record Type: Journal Article
• Authors: Cao, Xiaoyong; Yang, Yunxia; Yang, Yuntao; Li, Siru
• Other Names: Ragusa Maria Alessandra Academic Editor.
• Is Part Of: Discrete dynamics in nature and society. Volume 2022(2022)
• Publication Date: 2022-10-31
• Subjects: System analysis -- Periodicals; Dynamics -- Periodicals; Chaotic behavior in systems -- Periodicals; Differentiable dynamical systems -- Periodicals; 003.05
• DOI: 10.1155/2022/9220681
• Languages: English
• ISSNs: 1026-0226

Abstract

Abstract : This study investigates the effects of resale allowance on entry strategies, seller's expected revenue, and social welfare in a second-price auction with two-dimensional private information on values and participation costs. We characterize the perfect Bayesian equilibrium in cutoff strategies and identify sufficient conditions under which the equilibrium is unique. Our analysis suggests that resale allowance leads the low-value bidder to become more aggressive on entry, while high-value bidder has a lower incentive to enter. Furthermore, the allowance of resale can increase the social welfare under a sufficient condition, and its effect on expected revenue is ambiguous.