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Winning Losers in the Italian Football League “Auction” for Co-Ownership Resolution

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  • Nicola Dimitri

    (Department of Economics and Statistics, University of Sienna, and Research Fellow, Maastricht School of Management)

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    Abstract

    In the Italian Football League rights to a player’s performance could be co-owned by two clubs for one year. Co-ownership must then be resolved and if the clubs fail finding an agreement they are asked by the League to participate to an auction, where each of them submits a price offer for the missing half of the rights. The player offering the highest price obtains the missing half of the rights paying that price to the opponent. In the paper we characterize the auction equilibrium structure with both complete and incomplete information. Due to its features, a main finding in such auction is that “losers” can obtain a higher payoff than “winners”, and in this sense be the real winners. Then, by considering the auction as a more general mechanism for co-ownership resolution, we extend the model to any finite number of players and argue how some of the results with two players do not necessarily generalize. In particular, while with two players the equilibrium expected payoffs can never be negative this may not be so with a higher number of players. Finally, also with incomplete information the symmetric bidding equilibrium function with any finite number of players is in the “winning losers” spirit. Indeed, bids range between one’s value and twice of it, and increase with the number of players since it becomes more likely that some opponent will have a higher value.

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    File URL: http://web2.msm.nl/RePEc/msm/wpaper/MSM-WP2012-08.pdf
    File Function: First version, 2012
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    Bibliographic Info

    Paper provided by Maastricht School of Management in its series Working Papers with number 2012/08.

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    Length: 12 pages
    Date of creation: Jul 2012
    Date of revision:
    Handle: RePEc:msm:wpaper:2012/08

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    1. Paul Klemperer, 2004. "Introduction to Auctions: Theory and Practice
      [Auctions: Theory and Practice]
      ," Introductory Chapters, Princeton University Press.
    2. Paul Klemperer, 2004. "Auctions: Theory and Practice," Economics Papers 2004-W09, Economics Group, Nuffield College, University of Oxford.
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