A Simple Model of First Price Auction with Resale

If there is asymmetry among the bidders taking part in a first price auction, the equilibrium is not expost efficient. We consider a simple model of first price auction among two bidders where resale always occurs in case of inefficiency. We obtain mathematical formulas for the equilibrium strategies. We study properties of the equilibrium, derive some results of comparative statics and compare the revenue accruing to the auctioneer with his revenue in other auction procedures.