How to sell to buyers with crossholdingsReport as inadecuate




How to sell to buyers with crossholdings - Download this document for free, or read online. Document in PDF available to download.

Editor: Universidad Carlos III de Madrid. Departamento de Economía

Issued date: 2007-04-30

ISSN: 2340-5031

Serie-No.: UC3M Working papers. Economics07-25

Keywords: Optimal auctions , Crossholdings , Asymmetric auctions , Private values

Rights: Atribución-NoComercial-SinDerivadas 3.0 España

Abstract:This paper characterizes the optimal selling mechanism in the presence of horizontalcrossholdings. We find that this mechanism imposes a discrimination policy against thestronger bidders so that the sellers expected revenue is increasing in both thecommThis paper characterizes the optimal selling mechanism in the presence of horizontalcrossholdings. We find that this mechanism imposes a discrimination policy against thestronger bidders so that the sellers expected revenue is increasing in both thecommon crossholding and the degree of asymmetry in crossholdings. Furthermore, itcan be implemented by a sequential procedure that includes a price-preferencesscheme and the possibility of an exclusive deal with the weakest bidder. We also showthat a simple sequential negotiation mechanism, although suboptimal, yields a largersellers expected revenue than both the first-price and the second-price auctions.+-





Author: Loyola, Gino

Source: http://e-archivo.uc3m.es


Teaser



Universidad Carlos III de Madrid Repositorio institucional e-Archivo http:--e-archivo.uc3m.es Departamento de Economía DE - Working Papers.
Economics.
WE 2007-04-30 How to sell to buyers with crossholdings Loyola, Gino http:--hdl.handle.net-10016-834 Descargado de e-Archivo, repositorio institucional de la Universidad Carlos III de Madrid Working Paper 07-50 Economic Series 25 April 30, 2007 Departamento de Economía Universidad Carlos III de Madrid Calle Madrid, 126 28903 Getafe (Spain) Fax (34-91) 6249875 How to Sell to Buyers with Crossholdings∗ Gino Loyola † Abstract This 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. Keywords: optimal auctions, crossholdings, asymmetric auctions, private values. JEL Classification: C72, D44, D82, G32, G34 ∗ I am deeply grateful to M.
Angeles De Frutos for her comments and guidance.
This work has also benefited from comments by Juan José Dolado, Juan José Ganuza, Georges Siotis and the participants in the XXII Jornadas de Economía Industrial (Barcelona, 2006) and the 2007 ENTER Jamboree (Mannheim, 2007).
The usual disclaimers apply. † Correspondence to: C.
Madrid 126, Getafe, Madrid, Spain.
28903.
E-mail: gloyola@eco.uc3m.es. 1 Introduction Auctions in which bidders have crossholdings in other bidders’ surplus are very frequent in practice, as there are many cases that resemble a contest with ...





Related documents