@techreport{f9ffd48be33c4443895b0b5cd46dbbca,
title = "Auctions with Financial Externalities",
abstract = "We study sealed-bid auctions with financial externalities, i.e., auctions in which losers' utilities depend on how much the winner pays.In the unique symmetric equilibrium of the first-price sealed-bid auction (FPSB), larger financial externalities result in lower bids and in a lower expected revenue.The unique symmetric equilibrium of the second-price sealed-bid auction (SPSB) reveals ambiguous effects.We further show that a resale market does not have an e¤ect on the equilibrium bids and that FPSB yields a lower expected revenue than SPSB.With a reserve price, we find an equilibrium for FPSB that involves pooling at the reserve price.For SPSB we derive a necessary and sufficient condition for the existence of a weakly separating equilibrium, and give an expression for the equilibrium.",
keywords = "Auctions, financial externalities, reserve price, resale market",
author = "E. Maasland and A.M. Onderstal",
note = "Subsequently published in Economic Theory, 2007 Pagination: 25",
year = "2002",
language = "English",
volume = "2002-22",
series = "CentER Discussion Paper",
publisher = "Microeconomics",
type = "WorkingPaper",
institution = "Microeconomics",
}