auctions incumbent right first refusal shelley colleague clayton vernon background economics wrote short summary arguments rofr working second approach problem try come numerical estimate value option fact incumbent shipper option distributional consequences something value never paid numerical estimate value option could help argue value option case specific shall rather produce template use valuation case case vince kaminski forwarded vince j kaminski hou ect 01 20 2000 08 34 clayton vernon enron 01 20 2000 08 29 vince j kaminski hou ect ect cc stinson gibner hou ect ect zlu hou ect ect subject auctions incumbent right first refusal vince essay issue discussing adverse economic impact rights first refusal option first refuse match competitor offer restraint free trade impediment efficiency marketplace economic conclusion unambiguous incumbent right match offer made competitor item service value competitors invest time expense necessary prepare submit offers offers lower would otherwise contract often awarded inefficient incumbent instead efficient challenger traditional auction bids sealed item auction awarded highest bidder safely predict item awarded bidder values price reflecting full value item auction efficient result market economy financing high bid reflects resources freely allocated high bidder auction open bids safely predict item awarded correct bidder albeit slightly lower price donor item since bidder highest valuation simply increment infinitesimal amount second highest valuation modified auction incumbent bidder right match highest bid retain item competing bidder must justify due diligence bid preparation expenses following likely scenario incumbent spend due diligence instead uses savings help finance matching top bid competitor simply put incumbent right first refusal safely predicted simply match competitor bid rule thumb incumbent valuation item auction less valuation competitor amount due diligence administrative expenses incumbent firm expropriates expertise competitors valuations nontrivial financial exercise operational details required submitted along bid furthermore esoteric concept known winner curse bidder realizes bid actually prevails incumbent fails match almost certainly overbid given competitors even bother bid auction incumbent right first refusal submit bid rationally invest time expense expertise necessary may fire low ball bid almost every conceivable state world arising auction competitors expect lose money incumbent almost always retains contract market price despite incumbent necessarily placing highest value contract incumbent put contract efficient use