Why Do Sellers (Usually) Prefer Auctions?
We compare the most common methods for selling a company or other asset when participation is costly: a simple simultaneous auction, and a sequential process in which potential buyers decide in turn whether or not to enter the bidding. The sequential process is always more efficient. But pre-emptive...
| Main Authors: | , |
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| Format: | Journal article |
| Language: | English |
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American Economic Association
2009
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| _version_ | 1826299546490109952 |
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| author | Bulow, J Klemperer, P |
| author_facet | Bulow, J Klemperer, P |
| author_sort | Bulow, J |
| collection | OXFORD |
| description | We compare the most common methods for selling a company or other asset when participation is costly: a simple simultaneous auction, and a sequential process in which potential buyers decide in turn whether or not to enter the bidding. The sequential process is always more efficient. But pre-emptive bids transfer surplus from the seller to buyers. Because the auction is more conducive to entry - precisely because of its inefficiency - it usually generates higher expected revenue. We also discuss the effects of lock-ups, matching rights, break-up fees (as in takeover battles), entry subsidies, etc. |
| first_indexed | 2024-03-07T05:03:34Z |
| format | Journal article |
| id | oxford-uuid:d9251c6c-a549-4aaa-ab4e-960ca9ad827f |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T05:03:34Z |
| publishDate | 2009 |
| publisher | American Economic Association |
| record_format | dspace |
| spelling | oxford-uuid:d9251c6c-a549-4aaa-ab4e-960ca9ad827f2022-03-27T08:53:47ZWhy Do Sellers (Usually) Prefer Auctions?Journal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:d9251c6c-a549-4aaa-ab4e-960ca9ad827fEnglishDepartment of Economics - ePrintsAmerican Economic Association2009Bulow, JKlemperer, PWe compare the most common methods for selling a company or other asset when participation is costly: a simple simultaneous auction, and a sequential process in which potential buyers decide in turn whether or not to enter the bidding. The sequential process is always more efficient. But pre-emptive bids transfer surplus from the seller to buyers. Because the auction is more conducive to entry - precisely because of its inefficiency - it usually generates higher expected revenue. We also discuss the effects of lock-ups, matching rights, break-up fees (as in takeover battles), entry subsidies, etc. |
| spellingShingle | Bulow, J Klemperer, P Why Do Sellers (Usually) Prefer Auctions? |
| title | Why Do Sellers (Usually) Prefer Auctions? |
| title_full | Why Do Sellers (Usually) Prefer Auctions? |
| title_fullStr | Why Do Sellers (Usually) Prefer Auctions? |
| title_full_unstemmed | Why Do Sellers (Usually) Prefer Auctions? |
| title_short | Why Do Sellers (Usually) Prefer Auctions? |
| title_sort | why do sellers usually prefer auctions |
| work_keys_str_mv | AT bulowj whydosellersusuallypreferauctions AT klempererp whydosellersusuallypreferauctions |