Asymmetric Auctions with Resale

39 Pages Posted: 31 Jan 2006

See all articles by Isa Emin Hafalir

Isa Emin Hafalir

University of Technology Sydney (UTS); Carnegie Mellon University - David A. Tepper School of Business

Vijay Krishna

Penn State University

Multiple version iconThere are 2 versions of this paper

Date Written: January 30, 2006


We study equilibria of first- and second-price auctions with resale in a model with independent private values. With asymmetric bidders, the resulting inefficiencies create a motive for post-auction trade. In our basic model, resale takes place via monopoly pricing - the winner of the auction makes a take-it-or-leave-it offer to the loser after updating his prior beliefs based on his winning. We show that a first-price auction with resale has a unique monotonic equilibrium. Our main result is that with resale, the expected revenue from a first-price auction exceeds that from a second-price auction. The results extend to other resale mechanisms: monopsony and, more generally, probabilistic k-double auctions. The inclusion of resale possibilities thus permits a general revenue ranking of the two auctions that is not available when these are excluded.

Keywords: Auctions, Asymmetries, Resale

JEL Classification: D44, D82

Suggested Citation

Hafalir, Isa Emin and Krishna, Vijay, Asymmetric Auctions with Resale (January 30, 2006). Available at SSRN: or

Isa Emin Hafalir (Contact Author)

University of Technology Sydney (UTS) ( email )

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Carnegie Mellon University - David A. Tepper School of Business ( email )

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Vijay Krishna

Penn State University ( email )

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