Auctions and Shareholdings
David Ettinger ()
Annals of Economics and Statistics, 2008, issue 90, 233-257
This paper examines how shareholdings affect auctions' revenue and efficiency with independent private values. Two types of shareholdings are analyzed: vertical (resp: horizontal) toeholds cover situations in which bidders own a fraction of the seller's profit (resp: a share of their competitor's profit). Expected revenue is an increasing (resp: decreasing) function of vertical (resp: horizontal) toeholds. With both types of toeholds, auction formats are not revenue equivalent. Expected revenue is affected to a greater extent by the presence of toeholds in the second-price auction than in the first-price auction.
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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:2008:i:90:p:233-257
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