We present a model of a discriminatory price auction in which a large bidder
competes against many small bidders, followed by a post-auction resale stage
in which the large bidder is endogenously determined to be a buyer or a
seller. We extend results on first-price auctions with resale to this setting
and use these results to give a tractable characterization of equilibrium
behavior. We use this characterization to study the policy of capping the amount that may be won by large bidders in the auction, a policy that has
received little attention in the auction literature. Our analysis shows that
the trade-offs involved when adjusting these quantity caps can be understood
in terms familiar to students of asymmetric first-price single-unit
auctions. Furthermore, whether one seeks to maximize welfare or revenue can
have contradictory implications for the choice of cap.