When are Auctions Best?

Jeremy Bulow and Paul Klemperer

No 6393, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We compare the two most common bidding processes for selling a company or other asset when participation is costly to buyers. In an auction all entry decisions are made prior to any bidding. In a sequential bidding process earlier entrants can make bids before later entrants choose whether to compete. The sequential process is more efficient because entrants base their decisions on superior information. But pre-emptive bids transfer surplus from the seller to buyers. Because the auction is more conducive to entry in several ways it usually generates higher expected revenue. A substantially revised version of this paper has been published as CEPR DP7411.

Keywords: Auctions; Entry; Jump bidding; Procurement; Sequential sales (search for similar items in EconPapers)
JEL-codes: D44 G34 L13 (search for similar items in EconPapers)
Date: 2007-07
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: When Are Auctions Best? (2007)
Working Paper: When are Auctions Best? (2007)
Working Paper: When are Auctions Best? (2007)
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