Resale and bundling in auctions

Allowing resale in multi-object auctions increases bidders' incentives to jointly reduce demand, because resale increases low-value bidders' willingness to pay and reduces high-value bidders' willingness to pay. Therefore, resale may reduce the seller's revenue in multi-object auctions. In a simple model with complete information, however, allowing resale and bundling the objects on sale are "complement strategies" for the seller (under reasonable conditions) - by bundling and allowing resale the seller earns a higher revenue than by selling the objects separately and/or forbidding resale. We also show why allowing resale may reduce efficiency, and we analyze how resale affects a bidder's incentive to unilaterally reduce demand.