The Competitiveness of Joint Bidding in Multiple-Unit Uniform-Price Auctions

Dan Levin ()

RAND Journal of Economics, 2004, vol. 35, issue 2, 373-385

Abstract: Recent literature on joint bidding in a single-unit, common-value (CV) auction argues it enhances competition. Information pooling mitigates the adverse selection and thus elevates bidding and may even increase revenue despite the reduction in the number of bidders. I analyze joint bidding in a simple CV, uniform-price auction with multiple-unit demand, which introduces an opposite force due to (increased) monopsony power of the joint bidders, called demand reduction (DR). We show that even when DR is disallowed, the pro-competitive benefit from joint bidding in single-unit auctions does not generalize to a multiple-unit environment. With DR, the scope for improved competition is further eroded.

Date: 2004
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