Preemptive bidding and Pareto efficiency in takeover auctions
Economics Letters, 2017, vol. 159, issue C, 214-216
This paper extends the Fishman (1988) model of preemptive jump bidding in private value takeover auction to auctions with common and affiliated values. We show that in the presence of a common value component, jump bidding equilibrium results in higher social surplus. Furthermore, we show that, under certain conditions, allowing for preemptive jump bidding in common value auctions results in ex-ante Pareto improvement.
Keywords: Auction; Acquisition; Takeover; Preemptive bidding; Jump bidding (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:159:y:2017:i:c:p:214-216
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