This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

American Economic Review: Vol. 99 No. 4 (September 2009)

Expand

Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter

Explore:

AER - All Issues

AER Forthcoming Articles

Why Do Sellers (Usually) Prefer Auctions?

Article Citation

Bulow, Jeremy, and Paul Klemperer. 2009. "Why Do Sellers (Usually) Prefer Auctions?" American Economic Review, 99(4): 1544-75.

DOI: 10.1257/aer.99.4.1544

Abstract

We compare the most common methods for selling a company or other asset when participation is costly: a simple simultaneous auction, and a sequential process in which potential buyers decide in turn whether to enter the bidding. The sequential process is always more efficient. But preemptive bids transfer surplus from the seller to buyers. Because the auction is more conducive to entry -- precisely because of its inefficiency -- it usually generates higher expected revenue. We also discuss the effects of lock-ups, matching rights, break-up fees (as in takeover battles), entry subsidies, etc. (JEL D44, G34, L13)

Article Full-Text Access

Full-text Article

Authors

Bulow, Jeremy (Stanford U)
Klemperer, Paul (Nuffield College, U Oxford)

JEL Classifications

D44: Auctions
G34: Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
L13: Oligopoly and Other Imperfect Markets


American Economic Review


Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

AER - All Issues

AER - Forthcoming Articles

Virtual Field Journals


AEA Member Login:


AEAweb | AEA Journals | Contact Us