Auctions and shareholdings
AbstractThis paper examines how shareholdings affect auctions' revenue and efficiency with independent private values. Two types of shareholdings are analyzed: Vertical (resp: horizontal) toeholds cover situations in which bidders own a fraction of the seller's profit (resp: a share of their competitor's profit). Expected revenue is an increasing (resp: decreasing) function of vertical (resp: horizontal) toeholds. With both types of toeholds, auction formats are not revenue equivalent. Expected revenue is affected to a greater extent by the presence of toeholds in the second price auction than in the first-price auction.
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Date of creation: 2008
Date of revision:
Publication status: Published, Annales d'Economie et Statistiques, 2008, 90, 1-23
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auctions ; private values ; toeholds ; revenue comparison;
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