When are Auctions Best?
40 Pages Posted: 19 Jul 2007
There are 3 versions of this paper
When are Auctions Best?
When are Auctions Best?
Date Written: June 2007
Abstract
We compare the two most common bidding processes for selling a company or other asset when participation is costly to buyers. In an auction all entry decisions are made prior to any bidding. In a sequential bidding process earlier entrants can make bids before later entrants choose whether to compete. The sequential process is more efficient because entrants base their decisions on superior information. But pre-emptive bids transfer surplus from the seller to buyers. Because the auction is more conducive to entry in several ways it usually generates higher expected revenue.
Keywords: Auctions, jump bidding, sequential sales, procurement, entry
JEL Classification: D44, G34, L13
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Credible Sales Mechanisms and Intermediaries
By David Mcadams and Michael Schwarz
-
Why Do Sellers (Usually) Prefer Auctions?
By Jeremy Bulow and Paul Klemperer
-
Why Do Sellers (Usually) Prefer Auctions?
By Jeremy Bulow and Paul Klemperer