When are Auctions Best?

Jeremy Bulow () and Paul Klemperer
Additional contact information
Jeremy Bulow: Stanford University

No 2007-W03, Economics Papers from Economics Group, Nuffield College, University of Oxford

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.

Keywords: auctions; jump bidding; sequential sales; procurement; entry. (search for similar items in EconPapers)
JEL-codes: D44 G34 L13 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2007-07-09
New Economics Papers: this item is included in nep-com
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.nuffield.ox.ac.uk/economics/papers/2007/w3/Waab.pdf (application/pdf)

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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Persistent link: https://EconPapers.repec.org/RePEc:nuf:econwp:0703

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