Asymmetric private values auctions with application to joint bidding and mergers

Abstract

Much of the theoretical auction literature assumes that there are no observable differences between the bidders of an auction. In this paper, I present an asymmetric auction model where the distribution of a bidder's value depends on some commonly observed characteristics. The model is applied to joint bidding and mergers in auction markets. The results provide additional evidence that first-price auctions are less susceptible to the acquisition and exercise of market power than open auctions.