Low Revenue Equilibria in Simultaneous Ascending Price Auctions
University of Illinois, Bureau of Economics & Business Research, Working Paper No. 98-0121
Posted: 13 Apr 1999
Date Written: November 1998
Low Revenue equilibria allow participants in an auction to obtain goods at prices lower than would prevail in a competitive market. These outcomes are generated as perfect equilibria of ascending price, multi-unit auctions, without relying on future auctions or signals to sustain collusion. We argue that these equilibria could explain the low revenues of recent F.C.C. spectrum auctions, and discuss potential remedies to eliminate low revenue equilibria.
JEL Classification: D44
Suggested Citation: Suggested Citation