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10 - Making uncompetitive auctions competitive: a survey of experiments

Published online by Cambridge University Press:  04 December 2009

By
Offerman Theo  and
Onderstal Sander
Edited by
Jeroen Hinloopen
Afterword by
Hans-Theo Normann
Jeroen Hinloopen
Affiliation:
Universiteit van Amsterdam
Hans-Theo Normann
Affiliation:
Royal Holloway, University of London
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Summary

In the past fifteen years, governments around the world have often used auctions to sell scarce licenses to operate in markets. In many of these auctions, the number of interested competitors is relatively small compared to the number of available licenses. Auction design is crucial in such uncompetitive circumstances. Details of the design affect participants' decisions to compete seriously or not. Such decisions are important for the industry structure and the efficiency of the aftermarket as well as for the revenue raised in the auction. This chapter provides a survey of emerging experimental work on the question of how competition can be stimulated in uncompetitive license auctions. We consider papers that deal with the performance of standard auctions (such as the simultaneous ascending auction and the discriminative auction) in uncompetitive circumstances. We also discuss papers that investigate the performance of some less-known auctions (such as the Anglo-Dutch auction, the Amsterdam auction, and Right-To-Choose auctions) that actively seek to foster competition among bidders who would not compete in standard auctions.

Introduction

In the years 2000 and 2001, several European governments auctioned licenses for third-generation mobile telecommunication (UMTS). Governments raised an incredible amount of more than €100 billion in these auctions. Although the auctions in the different countries may have been very similar to a layperson's eye, they differed in small but crucial details.

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Experiments and Competition Policy , pp. 231 - 266
Publisher: Cambridge University Press
Print publication year: 2009

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