Raising rivals’ cost in multi-unit auctions

Maarten Janssen and Vladimir Karamychev

International Journal of Industrial Organization, 2017, vol. 50, issue C, 473-490

Abstract: The objective many telecom regulators want to achieve when they decide to auction spectrum is that acquiring firms pay a market price (based on the opportunity cost principle). The simultaneous ascending auction may fail in this respect, as it provides bidders with an opportunity to engage in strategic demand reduction. This paper asks whether the combinatorial clock auction (CCA) fares better in this respect. We show that the answer to this question depends on the objectives bidders have. If bidders have only the slightest preference to raise rivals’ cost, they will use the opportunities the CCA provides them to engage in strategic demand expansion. This is even the case when the clock phase ends with excess demand.

Keywords: Combinatorial auctions; Telecom markets; Spiteful biding; Raising rivals’ costs (search for similar items in EconPapers)
JEL-codes: D44 L96 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:50:y:2017:i:c:p:473-490

DOI: 10.1016/j.ijindorg.2016.04.011

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