How to sell to buyers with crossholdings
AbstractThis paper characterizes the optimal selling mechanism in the presence of horizontal crossholdings. We find that this mechanism imposes a discrimination policy against the stronger bidders so that the seller´s expected revenue is increasing in both the common crossholding and the degree of asymmetry in crossholdings. Furthermore, it can be implemented by a sequential procedure that includes a price-preferences scheme and the possibility of an exclusive deal with the weakest bidder. We also show that a simple sequential negotiation mechanism, although suboptimal, yields a larger seller´s expected revenue than both the first-price and the second-price auctions.
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Bibliographic InfoPaper provided by Universidad Carlos III de Madrid in its series Open Access publications from Universidad Carlos III de Madrid with number info:hdl:10016/834.
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Optimal auctions; Crossholdings; Asymmetric auctions; Private values;
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- Gino Loyola, 2008.
"Optimal takeover contests with toeholds,"
Economics Working Papers
we083217, Universidad Carlos III, Departamento de Economía.
- Loyola, Gino, . "Optimal takeover contests with toeholds," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/2729, Universidad Carlos III de Madrid.
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