Template-type: ReDIF-Paper 1.0
Author-Name: Jeremy Bulow
Author-Email: jbulow@stanford.edu
Author-Workplace-Name: Stanford University
Author-Name: Paul Klemperer
Author-Email: paul.klemperer@economics.ox.ac.uk
Author-Workplace-Name: Nuffield College, Oxford University
Author-Workplace-Homepage: http://www.nuffield.ox.ac.uk/college/
Title: When are Auctions Best?
Abstract: We compare the two most common bidding processes for selling a company or other
asset when participation is costly to buyers. In an auction all entry decisions are made 
prior to any bidding. In a sequential bidding process earlier entrants can make bids before
later entrants choose whether to compete. The sequential process is more efficient because 
entrants base their decisions on superior information. But pre-emptive bids transfer surplus
from the seller to buyers. Because the auction is more conducive to entry in several ways 
it usually generates higher expected revenue.
Keywords: auctions, jump bidding, sequential sales, procurement, entry.
Classification-JEL: D44, G34, L13
Length: 38 pages
Creation-Date: 2007-07-09
Number: 2007-W03
File-URL: http://www.nuffield.ox.ac.uk/economics/papers/2007/w3/Waab.pdf
File-Format: application/pdf
Handle: RePEc:nuf:econwp:0703