Publication: On bidding markets: the role of competition
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2008-01
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Abstract
This paper analyzes the effects of industrial concentration on bidding behaviour
and hence, on the seller´s expected proceeds. These effects are studied under
the CIPI model, an affiliated value set-up that nests a variety of valuation and
information environments. We formally decompose the revenue effects coming
from less competition into four types: a competition effect, an inference effect, a
winner´s curse effect and a sampling effect. The properties of these effects are
discussed and conditions for (non) monotonicity of both the equilibrium bid and
revenue are stated. Our results suggest that it is more likely that the seller
benefits from less competition in markets with more complete valuation and
information structures.
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Auctions, Competition, Affiliation, Inference