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The “Italian Football Federation Auction” for Co-ownership Resolution

Nicola Dimitri ()
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Nicola Dimitri: University of Siena

Review of Industrial Organization, 2021, vol. 58, issue 2, No 3, 275-285

Abstract: Abstract The paper is inspired by the Italian Football Federation (FIGC) Auction. The auction was used by the FIGC from the 1950s until 2015 to resolve a 50% co-ownership between two teams in the same league with respect to the performance rights of a football player. Though FIGC banned such joint ownership in 2015, the resolution process is nevertheless interesting with respect to the received literature. In the FIGC Auction each co-owner submits a price offer for the whole asset. The highest bid wins the auction and obtains the asset, while the loser receives as payment the bid that is offered by the winner. Therefore, whether a bidder is a buyer, or a seller, can be established only after the auction has taken place—rather than before the auction. The main contribution of this paper is to investigate the set of pure strategy Nash Equilibria for two extensions of the FIGC Auction, with complete information. The first extension is the Extended Italian Football Federation Auction (EA), where asset shares can differ from 50%. The other extension is the Second Price Extended Italian Football Federation Auction (SEA), which is based on second price rather than first price. As compared to more standard auctions, though in the EA equilibria no bidder may have negative profits, in some circumstances we find that losing the auction may be more profitable than winning the auction. Finally, in the SEA we show that truthful bidding is not a weakly dominant strategy and that—somewhat surprisingly—the set of Nash Equilibria coincides with that of EA.

Keywords: Italian Football Federation; Co-ownership resolution; Auctions (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s11151-020-09746-2

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