Competition among Sellers in Securities Auctions
- (pp. 1806-41)
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)Citation
Gorbenko, Alexander S., and Andrey Malenko. 2011. "Competition among Sellers in Securities Auctions." American Economic Review, 101 (5): 1806-41. DOI: 10.1257/aer.101.5.1806Additional Materials
JEL Classification
- D44 Auctions
- D82 Asymmetric and Private Information
- G10 General Financial Markets: General (includes Measurement and Data)