On bidding markets: the role of competition

Gino Loyola ()

Economics Working Papers from Universidad Carlos III, Departamento de Economía

Abstract: This paper analyzes the effects of industrial concentration on bidding behaviour and hence, on the seller´s expected proceeds. These effects are studied under the CIPI model, an affiliated value set-up that nests a variety of valuation and information environments. We formally decompose the revenue effects coming from less competition into four types: a competition effect, an inference effect, a winner´s curse effect and a sampling effect. The properties of these effects are discussed and conditions for (non) monotonicity of both the equilibrium bid and revenue are stated. Our results suggest that it is more likely that the seller benefits from less competition in markets with more complete valuation and information structures.

Keywords: Auctions; Competition; Affiliation; Inference (search for similar items in EconPapers)
JEL-codes: C62 D44 D82 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ifn, nep-mic and nep-mkt
Date: 2008-01
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Persistent link: http://EconPapers.repec.org/RePEc:cte:werepe:we083318

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