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Competition among Sellers in Securities AuctionsAlexander S. GorbenkoLondon Business School Andrey MalenkoMIT Sloan School of Management July 19, 2010 American Economic Review, Vol. 101, No. 5, pp. 1806-1841 Abstract: We study simultaneous security-bid second-price auctions with competition among sellers for potential bidders. The sellers compete by designing ordered sets of securities that the bidders can offer as payment for the assets. Upon observing auction designs, potential bidders decide which auctions to enter. We characterize all symmetric equilibria and show that there always exist equilibria in which auctions are in standard securities or their combinations. In large markets the unique equilibrium is auctions in pure cash. We extend the model for competition in reserve prices and show that binding reserve prices never constitute equilibrium as long as equilibrium security designs are not call options.
Number of Pages in PDF File: 62 Keywords: auctions, security design, competition among sellers, simultaneous auctions, endogenous entry JEL Classification: D43, D44, G32, G34 Accepted Paper SeriesDate posted: March 6, 2008 ; Last revised: August 31, 2011Suggested CitationContact Information
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