What Really Matters in Auction Design

Posted: 6 Feb 2003  

Paul Klemperer

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

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Abstract

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, L96

Suggested Citation

Klemperer, Paul, What Really Matters in Auction Design. Journal of Economic Perspectives, Vol. 16, No. 1, Winter 2002. Available at SSRN: https://ssrn.com/abstract=336621

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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