Signaling in Auctions among Competitors

Scarpatetti, Benedikt von and Wasser, Cédric (January 2010): Signaling in Auctions among Competitors. SFB/TR 15 Discussion Paper No. 293

Abstract

We consider a model of oligopolistic firms that have private information about their cost structure. Prior to competing in the market a competitive advantage, i.e., a cost reducing technology, is allocated to a subset of the firms by means of a multi-object auction. After the auction either all bids or only the prices to be paid are revealed to all firms. This provides an opportunity for signaling. Whether there exists an equilibrium in which bids perfectly identify the bidders’ costs generally depends on the type and fierceness of the market competition, the specific auction format, and the bid announcement policy.

• Item Type: Paper (Discussion Paper)
• Keywords: Auction; Oligopoly; Signaling
• Collections: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A7 - Auktionen, Anreizprobleme und Wettbewerb
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: D44, L13, D43, D82, C72
• Language: English