Cross-owned firms competing in auctions

The paper studies the effect of ownership links among bidders in auctions. Firstly, it is shown that in first-price, in second-price, and in all-pay auctions, ownership links damage both the seller and society; the bidders too may be impaired by the seller's strategic reaction. Secondly, the optimal selling procedure is characterized: in sharp contrast with standard auctions, both the seller and society gain from ownership links. In the last part of the paper the analysis is extended to the case of strategic entry.