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On The Optimal Package Format For Asset Sellers

Author

Listed:
  • Ming-Song Kao
  • Chih-Hsiang Hsu
  • Chung-Chih Liao

Abstract

A seller who owns two common-value assets can choose to either sell them as a bundle or separately. In this paper, we present a theoretical model to select the optimal selling option when there is asymmetric information between the seller and the buyers. Our main finding is that separate selling makes the seller fall into a bilateral monopoly environment, in which the assets are sold through bargaining, while bundled selling leads to a competitive bidding environment. When the seller’s bargaining ability is given, the difference between the two assets’ values increases, so the seller’s incentive to sell as a bundle decreases. On the other hand, given the values of both assets, when the seller’s bargaining power increases, the incentive to sell as a bundle decreases.

Suggested Citation

  • Ming-Song Kao & Chih-Hsiang Hsu & Chung-Chih Liao, 2009. "On The Optimal Package Format For Asset Sellers," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 3(1), pages 59-67.
    • Handle: RePEc:ibf:ijbfre:v:3:y:2009:i:1:p:59-67
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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