Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86033
Authors: 
Bennouri, Moez
Falconieri, Sonia
Year of Publication: 
2001
Series/Report no.: 
Tinbergen Institute Discussion Paper 01-083/1
Abstract: 
This paper addresses the issue of the choice of the optimalinstrument to sell new shares, this choice being price versusquantity discrimination (rationing). Previous results in theliterature (Benveniste and Wilhelm, 1990) show that the issuing firmwould be better off if allowed to use both price and quantitydiscrimination. This is not consistent with what we observe inpractice.Using a mechanism design approach, we derive endogenously the optimalIPO mechanism and show that it can be implemented through a uniform priceacross institutional investors and a uniform rationing, whenappropriate.
Subjects: 
Initial Public Offering
Price Discrimination
Rationing
Optimal Auction
JEL: 
D8
G2
Document Type: 
Working Paper

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