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Asymmetric wheat auctions with resale and partially divisible bidding objects. (English) Zbl 1409.91116

Summary: 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.

MSC:

91B26 Auctions, bargaining, bidding and selling, and other market models
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