Why Negotiation with a Single Syndicate May Be Preferred to Making Syndicates Compete: The Problem of Trapped Bidders

Robert Hansen and Naveen Khanna

The Journal of Business, 1994, vol. 67, issue 3, 423-57

Abstract: The authors investigate the choice between hiring syndicates through competitive bidding and negotiation. Making syndicates compete can result in inferior terms because of inefficiencies like less effective search, possibly less total search, and trapped bidders. Empirical results are consistent with the authors' hypotheses that purchasing syndicates search less under competition and that competition produces trapped bidders. The results also show that the primary market is rigidly divided under competition. When this occurs, total search under competitive bidding can be less than total search under negotiation. This may explain why competitive bidding is not favored in spite of its lower cost. Copyright 1994 by University of Chicago Press.

Date: 1994
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://dx.doi.org/10.1086/296640 full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jnlbus:v:67:y:1994:i:3:p:423-57

Access Statistics for this article

More articles in The Journal of Business from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().