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Competition among Sellers in Securities Auctions

Gorbenko, AS; Malenko, A; (2011) Competition among Sellers in Securities Auctions. American Economic Review , 101 (5) pp. 1806-1841. 10.1257/aer.101.5.1806. Green open access

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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.

Type: Article
Title: Competition among Sellers in Securities Auctions
Open access status: An open access version is available from UCL Discovery
DOI: 10.1257/aer.101.5.1806
Publisher version: https://doi.org/10.1257/aer.101.5.1806
Language: English
Additional information: This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions.
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management
URI: https://discovery.ucl.ac.uk/id/eprint/10104959
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