A note on the inefficiency of bargaining over the price of a share

Stergios Athanassoglou, Steven Brams () and Jay Sethuraman
Authors registered in the RePEc Author Service: Stergios Athanasoglou

MPRA Paper from University Library of Munich, Germany

Abstract: We study the problem of dissolving a partnership when agents have unequal endowments. Agents bid on the price of the entire partnership. The highest bidder is awarded the partnership and buys out her partners' shares at a per-unit price that is a function of the two highest bids. We show that there exists no price-setting mechanism satisfying certain mild regularity properties that is ex-post efficient, for any common prior of valuations. This result sharply contrasts the equal-endowment case in which efficient dissolution of the sort we are examining is possible through a simple k-double auction, as suggested by Cramton, Gibbons, and Klemperer (Econometrica, 1987).

Keywords: Partnership Dissolution; Double Auction; Ex-Post Efficiency (search for similar items in EconPapers)
JEL-codes: C72 C78 (search for similar items in EconPapers)
Date: 2010-08-01
New Economics Papers: this item is included in nep-gth
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Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/26330/1/MPRA_paper_26330.pdf revised version (application/pdf)

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