Publication: How to sell to buyers with crossholdings
Loading...
Identifiers
Publication date
2007-04-30
Defense date
Authors
Advisors
Tutors
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
This paper characterizes the optimal selling mechanism in the presence of horizontal
crossholdings. We find that this mechanism imposes a discrimination policy against the
stronger bidders so that the seller´s expected revenue is increasing in both the
common crossholding and the degree of asymmetry in crossholdings. Furthermore, it
can be implemented by a sequential procedure that includes a price-preferences
scheme and the possibility of an exclusive deal with the weakest bidder. We also show
that a simple sequential negotiation mechanism, although suboptimal, yields a larger
seller´s expected revenue than both the first-price and the second-price auctions.
Description
Keywords
Optimal auctions, Crossholdings, Asymmetric auctions, Private values