Abstract
We study an auction with two distinct types of potential bidders: consumers who wish to purchase the item for their own consumption and middlemen who wish to purchase the item for the purpose of reselling it to the final consumers. Typically, the behavior of the former is studied under the private values paradigm, while the behavior of the latter is studied under the common values paradigm. We consider the possibility that both types of bidders compete in the same auction. We show that if the middlemen have access to a larger market of consumers than the auctioneer, then the auctioneer may prefer to prevent the consumers from participating in the auction.
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