Bidding among friends and enemies with symmetric information
AbstractWe consider an auction setting, in a symmetric information framework, in which bidders, even if they fail to obtain the good, care about the price paid by the winner. We prove that the outcome of the first-price auction is not affected by identity-independent price externalities, while the outcome of the second-price auction is. In contrast, identity-dependent price externalities affect the outcome of both auction formats. In any case, the second-price auction exacerbates the effects of price externalities.
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Bibliographic InfoPaper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/5447.
Date of creation: 2010
Date of revision:
Publication status: Published in Journal of institutional and theoretical economics, 2010, Vol. 166, no. 2. pp. 365-385.Length: 20 pages
Budget-constraints; toeholds; externalities; allocation; revenue; auctions;
Find related papers by JEL classification:
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
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