Optimal privatisation using qualifying auctions

Boone, J; Goeree, JK

Optimal privatisation using qualifying auctions

Boone, J Goeree, JK

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Publication Type:: Journal Article
Citation:: Economic Journal, 2009, 119 (534), pp. 277 - 297
Issue Date:: 2009-01-01

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Field	Value	Language
dc.contributor.author	Boone, J	en_US
dc.contributor.author	Goeree, JK https://orcid.org/0000-0001-9876-3425	en_US
dc.date.issued	2009-01-01	en_US
dc.identifier.citation	Economic Journal, 2009, 119 (534), pp. 277 - 297	en_US
dc.identifier.issn	0013-0133	en_US
dc.identifier.uri	http://hdl.handle.net/10453/29181
dc.description.abstract	This article explores use of auctions for privatising public assets. In our model, a single 'insider'bidder possesses information about the asset's common value. Bidders are privately informed about their costs of exploiting the asset. Due to the insider's presence, uninformed bidders face a strong winner's curse in standard auctions. We show that the optimal mechanism discriminates against the informationally advantaged bidder. It can be implemented via a two-stage 'qualifying auction'. In the first stage, non-binding bids are submitted to determine who enters the second stage, which consists of a standard second-price auction augmented with a reserve price. © The Author(s). Journal compilation © 2009 by the Royal Economic Society.	en_US
dc.relation.ispartof	Economic Journal	en_US
dc.relation.isbasedon	10.1111/j.1468-0297.2008.02213.x	en_US
dc.subject.classification	Economics	en_US
dc.title	Optimal privatisation using qualifying auctions	en_US
dc.type	Journal Article
utslib.citation.volume	534	en_US
utslib.citation.volume	119	en_US
utslib.for	1402 Applied Economics	en_US
utslib.for	14 Economics	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
utslib.copyright.status	closed_access
pubs.issue	534	en_US
pubs.publication-status	Published	en_US
pubs.volume	119	en_US

Abstract:

This article explores use of auctions for privatising public assets. In our model, a single 'insider'bidder possesses information about the asset's common value. Bidders are privately informed about their costs of exploiting the asset. Due to the insider's presence, uninformed bidders face a strong winner's curse in standard auctions. We show that the optimal mechanism discriminates against the informationally advantaged bidder. It can be implemented via a two-stage 'qualifying auction'. In the first stage, non-binding bids are submitted to determine who enters the second stage, which consists of a standard second-price auction augmented with a reserve price. © The Author(s). Journal compilation © 2009 by the Royal Economic Society.

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http://hdl.handle.net/10453/29181