Resale in Auctions with Financial Constraints
Ikusi/ Ireki
Data
2012Laburpena
This paper analyzes auctions where bidders face nancial constraints that may force
them to resell part of the property of the good (or subcontract part of a project) at
a resale market. First we show that the ine¢ cient speculative equilibria of second-
price auctions (Garratt and Tröger, 2006) generalizes to situations with partial resale
where only the high value bidder is nancially constrained. However, when all players
face nancial constraints the ine¢ cient speculative equilibria disappear. Therefore, for
auctioning big facilities or contracts where all bidders are nancially constrained and
there is a resale market, the second price auction remains a simple and appropriate
mechanism to achieve an e¢ cient allocation.