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Bidding among Friends and Enemies with Symmetric Information

Listed author(s):
  • David Ettinger

    ()

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine, CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - CNRS - Centre National de la Recherche Scientifique - Université Paris-Dauphine)

We 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 aff ected by identity independent price externalities while the outcome of the second-price auction is. In contrast, identity dependent price externalities a ect the outcome of both auction formats. In any case, the second-price auction exacerbates the eff ects of price externalities.

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Paper provided by HAL in its series Post-Print with number hal-00701295.

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Date of creation: 2010
Publication status: Published in Journal of Institutional and Theoretical Economics, Mohr Siebeck, 2010, 166 (2), pp.365-385
Handle: RePEc:hal:journl:hal-00701295
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00701295
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  1. Jeremy Bulow & Ming Huang & Paul Klemperer, 1996. "Toeholds and Takeovers," Finance 9608001, EconWPA.
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  12. David Ettinger, 2003. "Efficiency in auctions with crossholdings," Post-Print hal-00702434, HAL.
  13. Singh, Rajdeep, 1998. "Takeover Bidding with Toeholds: The Case of the Owner's Curse," Review of Financial Studies, Society for Financial Studies, vol. 11(4), pages 679-704.
  14. Burkart, Mike, 1995. " Initial Shareholdings and Overbidding in Takeover Contests," Journal of Finance, American Finance Association, vol. 50(5), pages 1491-1515, December.
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  16. Fan, Cuihong & Jun, Byoung Heon & Wolfstetter, Elmar G., 2009. "Auctioning Process Innovations when Losers’ Bids Determine Royalty Rates," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 291, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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