Collusion and Predation in Auction Markets

34 Pages Posted: 16 Feb 2001

See all articles by Paul Klemperer

Paul Klemperer

University of Oxford - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: February 2001


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, and the Anglo-Dutch auction - a hybrid of the sealed-bid and ascending auctions - may often perform better. Effective anti-trust policy is also critical.

However, everything depends on the details of the context; the circumstances of the recent U.K. mobile-phone license made an ascending format ideal, but this author (and others) correctly predicted the same format would fail in the Netherlands and elsewhere. Auction design is not "one size fits all".

We also discuss the 3G spectrum auctions in Germany, Italy, Austria and Switzerland, and football TV-rights, TV franchise and other radiospectrum auctions, electricity markets, and takeover battles.

[This is a revised and extended version of the paper previously circulated under the title "What Really Matters in Auction Design".]

Keywords: Antitrust, Collusion, Predation, Entry, Entry Deterrence, Auctions, Telecommunications, Takeovers, Electricity, Bidding, Auction Theory, Radiospectrum, UMTS, Mobile Phones, Mechanism Design

JEL Classification: L45, L96, D44, D43, L13

Suggested Citation

Klemperer, Paul, Collusion and Predation in Auction Markets (February 2001). Available at SSRN: or

Paul Klemperer (Contact Author)

University of Oxford - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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