Surplus captured via forced sale plus token auction variant

Quantify the expected fraction of the minimum surplus F that a winning bidder would realize under a forced-sale-plus-token-auction variant designed to restore market liquidity when the market liquidity constraint binds, and identify conditions under which the realized fraction is material.

Background

When the market liquidity constraint binds, the paper explores a variant that performs a forced sale and subsequent token auction, with proceeds potentially directed to the winning bidder up to F, the minimum surplus otherwise reserved for free-riding token holders.

The authors note uncertainty over how much of F the bidder would actually realize in practice, given factors like market skepticism about the bidder’s ability to reach the target value and timing effects.