A Resale Explanation for the Declining Price Anomaly in Sequential Auctions

This paper studies price trends in a sequential first-price common-value auction with resale. It differs from the previous research in that it considers sequential auctions with multi-unit demand. In the two-stage case, we propose a condition that guarantees the existence of a symmetric monotonic equilibrium which exhibits a declining trend. This is because bidders have the incentive to overbid in the first round to lower their rivals' intertemporal inference on the object value so that they can obtain a second-stage advantage. We also characterize the necessary properties of symmetric monotonic equilibria in the finite N-stage and the infinite-stage cases. In the former case, the price trend remains constant and drops only at the last stage; in the latter case, we have a constant price trend throughout.