Economics at your fingertips  

Demand reduction and preemptive bidding in multi-unit license auctions

Jacob Goeree (), Theo Offerman and Randolph Sloof ()

Experimental Economics, 2013, vol. 16, issue 1, 52-87

Abstract: Multi-unit ascending auctions allow for equilibria in which bidders strategically reduce their demand and split the market at low prices. At the same time, they allow for preemptive bidding by incumbent bidders in a coordinated attempt to exclude entrants from the market. We consider an environment where both demand reduction and preemptive bidding are supported as equilibrium phenomena of the ascending auction. In a series of experiments, we compare its performance to that of the discriminatory auction. Strategic demand reduction is quite prevalent in the ascending auction even when entry imposes a (large) negative externality on incumbents. As a result, the ascending auction performs worse than the discriminatory auction both in terms of revenue and efficiency, while entrants’ chances are similar across the two formats. Copyright Economic Science Association 2013

Keywords: Multi-license auctions; Demand reduction; External effects; Preemption; D44; D45; C91 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17) Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Demand reduction and preemptive bidding in multi-unit license auctions (2009) Downloads
Working Paper: Demand Reduction and Pre-emptive Bidding in Multi-Unit License Auctions (2005) Downloads
Working Paper: Demand Reduction and Preemptive Bidding in Multi-Unit License Auctions (2004) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/10683/PS2

Access Statistics for this article

Experimental Economics is currently edited by David J. Cooper, Lata Gangadharan and Charles N. Noussair

More articles in Experimental Economics from Springer, Economic Science Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2019-08-20
Handle: RePEc:kap:expeco:v:16:y:2013:i:1:p:52-87