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Auction prices, market share, and a common agent

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  • Coatney, Kalyn T.
  • Shaffer, Sherrill L.
  • Menkhaus, Dale J.

Abstract

The primary pro-competitive justification for multiple principals to hire a common bidding agent is efficiency. The efficiency gained by doing so increases the advantage of the common bidding agent. Almost common value auction theory predicts that an advantaged bidder is able to reduce competition by credibly enhancing the ‘winner's curse’ of disadvantaged rivals. The credible threat results in disadvantaged rivals exiting the bidding process early, leaving the advantaged bidder to purchase most, if not all, units at lower prices than when rivals have common values. The results of our empirical study of a common bidding agent are consistent with this theory.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 81 (2012)
Issue (Month): 1 ()
Pages: 61-73

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Handle: RePEc:eee:jeborg:v:81:y:2012:i:1:p:61-73

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Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Almost common value auctions; Common agents; Auction price analysis; Antitrust;

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Cited by:
  1. Kalyn Coatney & Jesse Tack, 2014. "The Impacts of an Antitrust Investigation: A Case Study in Agriculture," Review of Industrial Organization, Springer, vol. 44(4), pages 423-441, June.
  2. Kalyn T. Coatney & Dale J. Menkhaus & Sherrill Shaffer, 2014. "Impacts of a Capacity Advantaged Bidder in Sequential Common Value Auctions: Evidence from the Laboratory," CAMA Working Papers 2014-17, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.

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