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Gorbenko, Alexander S., and
Andrey Malenko. 2011. "Competition among Sellers in Securities Auctions."
,
101(5): 1806-41.
Show Article Details
DOI: 10.1257/aer.101.5.1806
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. (JEL D44, D82, G10)
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Online Appendix
Authors:
Gorbenko, Alexander S. (London Business School)
Malenko, Andrey (MIT)
JEL Classifications:
D44: Auctions
D82: Asymmetric and Private Information
G10: General Financial Markets: General (includes Measurement and Data)
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