Template-type: ReDIF-Paper 1.0
Author-Name: Jeremy Bulow 
Author-Email: jbulow@stanford.edu
Author-Workplace-Name: Graduate School of Business, Stanford University, USA
Author-Name: Paul Klemperer
Author-Email: paul.klemperer@economics.ox.ac.uk.
Author-Workplace-Name: Nuffield College, University of Oxford, Oxford, UK
Title: Why Do Sellers (Usually) Prefer Auctions?
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 or not to enter the bidding. The sequential process
is always more efficient. But pre-emptive 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.
Keywords:  Auctions, jump bidding, sequential sales, procurement, entry
Classification-JEL: D44 Auctions; G34 Mergers & Acquisitions; L13 Oligopoly & Imperfect Markets.
Length: 43 pages
Creation-Date: 2009-06-01
Number: 2009-W05
File-URL: http://www.nuffield.ox.ac.uk/economics/papers/2009/w5/wdaforweb29jun09.pdf
File-Format: application/pdf
Handle: RePEc:nuf:econwp:0905