Selling Order in a Sequential Auction

This paper studies sequential second-price auctions with heterogeneous goods and both global and local bidders. We show that selling order affects not only revenue and efficiency, but also the incidence of bidder losses. As the variance of one good vanishes, selling it first yields (weakly) higher revenue with probability approaching one, while selling it second yields (weakly) higher efficiency. Specifically, as the variance shrinks, the only order-dependent configuration that generates a revenue–welfare trade-off and survives with positive probability is the one in which the global bidder wins the low-variance good first but then loses the high-variance good, eliminating synergy and generating an ex-post loss. This exposure raises revenue but lowers welfare relative to the alternative order. By contrast, selling the high-variance good first makes this loss-making configuration unlikely and yields efficient allocations with (weakly) lower revenue. Simulations show that such losses occur with non-negligible probability, reinforcing the practical relevance. The results uncover a novel trade-off and identify selling order as a design instrument in sequential auctions.