Partial pooling at the reserve price in auctions with resale opportunities

Two features common to man auctions are the use of reserve prices and the e xistence of secondary markets for the goods being sold. Even in simple symm etric settings, the combination of these features can preclude existence of an equilibrium in symmetric separating bidding strategies. With a reserve price sufficiently far below the maximum (endogenous) valuation, a symmetri c equilibrium still exists, but with some types pooling at the reserve. The optimal reserve price depends not only on the joint distribution of bidder s' information before and after the auction, but also on how surplus is div ided in the secondary market. Journal of Economic Literature Classification Numbers: D44, C7, L1, D82 (C) 2000 Academic Press.