Can the seller benefit from an insider in common-value auctions?

In existing models of first-price common-value auctions, heterogeneous bidd er information characterized by a well-informed "insider" is detrimental to the seller's revenue. We show that this is not a general principle. The li nkage effect of increased information identified by Milgrom and Weber has f orce in our model of heterogeneous bidders, and dominates any adverse effec ts of an insider on revenues. In addition, a bidder with garbled informatio n can profit in a first-price auction if his information is private, and an inside bidder may prefer to have less information about the outside bidder 's signal. Journal of Economic Literature Classification Numbers: D44, D82. 2000 Academic Press.