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Low Revenue Equilibria in Simultaneous Ascending Price Auctions
Richard Engelbrecht-Wiggans University of Illinois at Urbana-Champaign - Department of Business Administration Charles M. Kahn University of Illinois at Urbana-Champaign - Department of Finance November 1998 University of Illinois, Bureau of Economics & Business Research, Working Paper No. 98-0121 Abstract: Low Revenue equilibria allow participants in an auction to obtain goods at prices lower than would prevail in a competitive market. These outcomes are generated as perfect equilibria of ascending price, multi-unit auctions, without relying on future auctions or signals to sustain collusion. We argue that these equilibria could explain the low revenues of recent F.C.C. spectrum auctions, and discuss potential remedies to eliminate low revenue equilibria.
JEL Classifications: D44 Working Paper SeriesDate posted: April 13, 1999 ; Last revised: October 31, 1999Suggested CitationContact Information
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