Auctions vs. Negotiations.
Which is the more profitable way to sell a company: a public auction or an optimally structured negotiation with a smaller number of bidders? We show that under standard assumptions the public auction is always preferable, even if it forfeits all the seller's negotiating power, including the ab...
| Main Authors: | , |
|---|---|
| Format: | Working paper |
| Language: | English |
| Published: |
National Bureau of Economic Research
1994
|
| _version_ | 1797087539732938752 |
|---|---|
| author | Bulow, J Klemperer, P |
| author_facet | Bulow, J Klemperer, P |
| author_sort | Bulow, J |
| collection | OXFORD |
| description | Which is the more profitable way to sell a company: a public auction or an optimally structured negotiation with a smaller number of bidders? We show that under standard assumptions the public auction is always preferable, even if it forfeits all the seller's negotiating power, including the ability to withdraw the object from sale, provided that it attracts at least one extra bidder. An immediate public auction also dominates negotiating while maintaining the right to hold an auction subsequently with more bidders. The results hold for both the standard independent private values model and a common values model. They suggest that the value of negotiating skill is small relative to the value of additional competition. |
| first_indexed | 2024-03-07T02:37:03Z |
| format | Working paper |
| id | oxford-uuid:a924ad0e-92f7-4590-8c0d-1fd01b3b39c0 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T02:37:03Z |
| publishDate | 1994 |
| publisher | National Bureau of Economic Research |
| record_format | dspace |
| spelling | oxford-uuid:a924ad0e-92f7-4590-8c0d-1fd01b3b39c02022-03-27T03:06:25ZAuctions vs. Negotiations.Working paperhttp://purl.org/coar/resource_type/c_8042uuid:a924ad0e-92f7-4590-8c0d-1fd01b3b39c0EnglishDepartment of Economics - ePrintsNational Bureau of Economic Research1994Bulow, JKlemperer, PWhich is the more profitable way to sell a company: a public auction or an optimally structured negotiation with a smaller number of bidders? We show that under standard assumptions the public auction is always preferable, even if it forfeits all the seller's negotiating power, including the ability to withdraw the object from sale, provided that it attracts at least one extra bidder. An immediate public auction also dominates negotiating while maintaining the right to hold an auction subsequently with more bidders. The results hold for both the standard independent private values model and a common values model. They suggest that the value of negotiating skill is small relative to the value of additional competition. |
| spellingShingle | Bulow, J Klemperer, P Auctions vs. Negotiations. |
| title | Auctions vs. Negotiations. |
| title_full | Auctions vs. Negotiations. |
| title_fullStr | Auctions vs. Negotiations. |
| title_full_unstemmed | Auctions vs. Negotiations. |
| title_short | Auctions vs. Negotiations. |
| title_sort | auctions vs negotiations |
| work_keys_str_mv | AT bulowj auctionsvsnegotiations AT klempererp auctionsvsnegotiations |