Making Auctions Robust to Aftermarkets
summary
Uniform-price auctions can collapse once unconstrained resale exists: equilibrium welfare can drop to price of anarchy Θ(log m) because speculators buy many units and resell, warping primary bids. Three concrete fixes restore constant guarantees: run a λ,μ-smooth auction (e.g., discriminatory pricing) to inherit smoothness bounds; use balanced posted prices that are high/low enough and provably exist for decreasing marginal values; or add anonymous reserve prices to the uniform-price auction, which empirically preserves price discovery and tolerates estimation error.
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