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Repeated Auctions with the Right of First Refusal

Author

Listed:
  • Hayley Chouinard
  • Jonathan Yoder

    (School of Economic Sciences, Washington State University)

Abstract

This paper characterizes a set of Nash equilibria in a first-price sealed-bid repeated auction with the right of first refusal using two bidders and asymmetric information regarding the bidders' value distributions. When contract value is constant from one auction to the next and winners' values are publicized, agents retain the value of incumbency and bids are identical to one-shot auctions. When each agent's contract values are random across auctions, agents choose to bid away the full expected value of incumbency, providing a measure of the value of information in this context.

Suggested Citation

  • Hayley Chouinard & Jonathan Yoder, 2006. "Repeated Auctions with the Right of First Refusal," Working Papers 7, School of Economic Sciences, Washington State University, revised Jul 2007.
    • Handle: RePEc:wsu:wpaper:chouinard-2
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    File URL: http://ideas.repec.org/a/bpj/bejtec/v7y2007i1n21.html
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    File URL: http://faculty.ses.wsu.edu/WorkingPapers/WP_2006-7Auctions9.pdf
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    File URL: http://www.bepress.com/bejte/vol7/iss1/art21/
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    References listed on IDEAS

    as
    1. Hayley Chouinard, 2006. "Repeated Auctions with the Right of First Refusal and Asymmetric Information," Working Papers 2006-6, School of Economic Sciences, Washington State University.
    2. Grosskopf, Brit & Roth, Alvin E., 2009. "If you are offered the Right of First Refusal, should you accept? An investigation of contract design," Games and Economic Behavior, Elsevier, vol. 65(1), pages 176-204, January.
    3. Elmar Wolfstetter & Michael Landsberger & Jakob Rubinstei & Shmuel Zamir, 1997. "First-Price Auctions when the Ranking of Valuations," Microeconomics 9701004, University Library of Munich, Germany.
    4. Hayley H. Chouinard, 2005. "Auctions with and without the Right of First Refusal and National Park Service Concession Contracts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 1083-1088.
    5. Natalia Fabra, 2003. "Tacit Collusion in Repeated Auctions: Uniform Versus Discriminatory," Journal of Industrial Economics, Wiley Blackwell, vol. 51(3), pages 271-293, September.
    6. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    7. Skrzypacz, Andrzej & Hopenhayn, Hugo, 2004. "Tacit collusion in repeated auctions," Journal of Economic Theory, Elsevier, vol. 114(1), pages 153-169, January.
    8. Owen R. Phillips & Dale J. Menkhaus & Kalyn T. Coatney, 2003. "Collusive Practices in Repeated English Auctions: Experimental Evidence on Bidding Rings," American Economic Review, American Economic Association, vol. 93(3), pages 965-979, June.
    9. Osmundsen, Petter, 1996. "Repeated Auctions of Franchises for Nonrenewable Resources," Journal of Regulatory Economics, Springer, vol. 10(2), pages 183-189, September.
    10. Aoyagi, Masaki, 2003. "Bid rotation and collusion in repeated auctions," Journal of Economic Theory, Elsevier, vol. 112(1), pages 79-105, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    repeated auction; right of first refusal;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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