Sequential auctions with synergies: The paradox of positive synergies

Abstract

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Auctions with synergy and resale

“…In the sequential auction setting, Leufkens et al (2006) identify three types of inefficient outcomes: 1) the first-item winner has the highest valuation of the package but does not win the second item, 2) the second-item winner has the highest valuation of the package but does not win the first-item, and 3) a third bidder has the highest valuation of the package but does not win any item. A natural way to restore efficiency is to allow for postauction resale.…”

“…Leufkens et al (2006Leufkens et al ( , 2007 consider both theoretically and experimentally a sequential auction of two projects where the synergy factor appears as a multiplier on the stand-alone value of the second project. They model the sequential auctions as second-price sealed bid and show that the presence of synergies induces more competitive bidding, leading to lower expected profit to the bidders and higher expected revenue for the seller.…”

“…More specifically, we model resale in the framework adopted by Leufkens et al (2006Leufkens et al ( , 2007 described above. As is well known, one undesirable feature caused by synergies (in both simultaneous and sequential auctions)…”

An improved sequential auction with complementarity for pricing the construction land quota

“…Those bidders’ valuations of the quota (‘item 1’) and construction land (‘item 2’) are V 1 i and V 2 i , respectively, i =1,2,∙∙∙, n respectively. V 1 i and V 2 i follow the uniform distribution of [0, a ] and [0, 1], respectively [ 40 , 41 ]. In the second stage, the bidder who successfully wins the quota is referred to as w , and l refers to the other n − 1 bidders who lose the first auction.…”

Subcontracting and the survival of plants in the road construction industry: A panel quantile regression analysis

“…Theoretical research by Jeitschko and Wolfstetter (2002) and De Silva, Jeitschko and Kosmopoulou (2005) points to the fact that potential learning benefits for the winner create incentives for competitors to engage in risky behavior leading often to a serious bankruptcy problem (Leufkens, Peeters and Vermeulen (2010)). Under such competitive pressures, firms could contract out part of their work to ameliorate uncertainty and share information and expertise.…”