On the Optimal Package Format for Asset Sellers

The International Journal of Business and Finance Research, Vol. 3, No. 1, pp. 59-67, 2009

9 Pages Posted: 27 Feb 2010

See all articles by Ming Sung Kao

Ming Sung Kao

Independent

Chih-Hsiang Hsu

Ming Chuan University

Chung-Chih Liao

National Taiwan University

Date Written: 2009

Abstract

A seller who owns two common-value assets can choose to either sell them as a bundle or separately. In this paper, we present a theoretical model to select the optimal selling option when there is asymmetric information between the seller and the buyers. Our main finding is that separate selling makes the seller fall into a bilateral monopoly environment, in which the assets are sold through bargaining, while bundled selling leads to a competitive bidding environment. When the seller’s bargaining ability is given, the difference between the two assets’ values increases, so the seller’s incentive to sell as a bundle decreases. On the other hand, given the values of both assets, when the seller’s bargaining power increases, the incentive to sell as a bundle decreases.

JEL Classification: D44, D82

Suggested Citation

Kao, Ming Sung and Hsu, Chih-Hsiang and Liao, Chung-Chih, On the Optimal Package Format for Asset Sellers (2009). The International Journal of Business and Finance Research, Vol. 3, No. 1, pp. 59-67, 2009, Available at SSRN: https://ssrn.com/abstract=1555233

Chih-Hsiang Hsu

Ming Chuan University ( email )

No. 250, Section 5
Zhongshan North Road
Taipei, 111
Taiwan

Chung-Chih Liao

National Taiwan University ( email )

1 Sec. 4, Roosevelt Road
Taipei 106, 106
Taiwan

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