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Entry by successful speculators in auctions with resale

Published online by Cambridge University Press:  14 March 2025

Marco Pagnozzi and
Krista J. SaralOpen the ORCID record for Krista J. Saral[Opens in a new window]
Marco Pagnozzi*
Affiliation:
Department of Economics and CSEF, Università di Napoli Federico II, Via Cintia (Monte S. Angelo), 80126 Naples, Italy
Krista J. Saral*
Affiliation:
George Herbert Walker School of Business and Technology, Webster University Geneva, Route de Collex 15, 1293 Bellevue, SwitzerlandGATE Lyon St Etienne, Écully, France
*
pagnozzi@unina.it
kjsaral@webster.ch
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Abstract

We experimentally analyze the role of speculators, who have no use value for the objects on sale, in auctions. The environment is a uniform-price sealed-bid auction for 2 identical objects, followed by a free-form bargaining resale market, with one positive-value bidder, and either one or two speculators who may choose simultaneously whether to enter the auction. We show that the bidder accommodates speculators by reducing demand in the auction and subsequently purchasing in the resale market, which encourages entry by speculators. The presence of multiple speculators induces each speculator to enter less often, but increases competition in the auction and the auction price. Speculators earn positive profits on average, except when multiple speculators enter the auction.

Keywords

SpeculatorsEntryMulti-object auctionsResaleEconomic experiments

JEL classification

D44: AuctionsC90: General

Information

Type
Original Paper
Information
Experimental Economics , Volume 22 , Issue 2 , 15 June 2019, pp. 477 - 505
Copyright
Copyright © 2018 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10683-018-9564-5) contains supplementary material, which is available to authorized users.

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