Discussion Paper Details

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Title: What Really Matters in Auction Design

Author(s): Paul Klemperer

Publication Date: October 2000

Keyword(s): Antitrust, Auction Theory, Auctions, Bidding, Collusion, Electricity, Entry, Entry Deterrence, Mechanism Design, Mobile Phones, Predation, Radiospectrum, Takeovers, Telecommunications and UMTS

Programme Area(s): Industrial Organization and Public Economics

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 (we discuss radiospectrum and football TV-rights auctions, electricity markets, and takeover battles), and the Anglo-Dutch auction ? a hybrid of the sealed-bid and ascending auctions may often perform better. However, everything depends on the details of the context; the circumstances of the recent UK mobile-phone license auction made an ascending format ideal. We also discuss the current 3G spectrum auctions in Germany and the Netherlands. Auction design is a matter of ?horses for courses?, not ?one size fits all?.

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Bibliographic Reference

Klemperer, P. 2000. 'What Really Matters in Auction Design'. London, Centre for Economic Policy Research.