Template-type: ReDif-Paper 1.0
Author-Name: Leufkens Kasper 
Author-Name: Peeters Ronald 
Author-workplace-name: METEOR
Title: Synergies are a reason to prefer first-price auctions!
Abstract: In this paper we show that in a private value setting first-price auctions can be preferred to second-price auctions. We consider a sequential auction of two objects with positive synergies and compare both auction formats. Although the second-price auction performs better in terms of efficiency and revenue, the first-price auction performs much better on a so far neglected dimension. Namely, the probability that the winner of the first object goes bankrupt is almost always higher when using the second-price rule. Our findings therefore support the common use of first-price auctions, most notably for procurement.
Keywords: industrial organization ; 
Series: Research Memoranda
Creation-Date: 2006
Number: 034
File-URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:80c00258-6844-40b3-a124-914c0665c084/datastreams/ASSET1/content
File-Format: application/pdf
File-Size: 215526
Handle: RePEc:unm:umamet:2006034