What Really Matters in Auction Design
University of Oxford - Department of Economics; Centre for Economic Policy Research (CEPR)
Journal of Economic Perspectives, Vol. 16, No. 1, Winter 2002
The most important issues in auction design are the traditional concerns of competition policy - preventing collusive, predatory, and entry-deterring behaviour. Ascending and uniform-price auctions are particularly vulnerable to these problems. The Anglo-Dutch auction - a hybrid of the sealed-bid and ascending auctions - may perform better. Effective antitrust is also critical. Notable fiascoes in auctioning mobile-phone licenses, TV franchises, companies, electricity, etc., and especially the European "third-generation" (UMTS) spectrum auctions, show that everything depends on the details of the context. Auction design is not "one size fits all".
Keywords: Auctions, Antitrust, Telecommunications, Spectrum Auctions, Bidding, Auction Theory, Collusion, Entry Deterrence, Predation, Takeover Battles, Ascending Auction, Sealed-Bid Auction, Winner's Curse, Uniform Price Auction, Discriminatory Auction, Anglo-Dutch Auction, Electricity, TV franchise, Football TV-rights, Private Values, Common Values, Mechanism Design, Competition Policy
JEL Classification: D44, L41, L96Accepted Paper Series
Date posted: February 6, 2003
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