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

See all articles by Richard Engelbrecht-Wiggans

Richard Engelbrecht-Wiggans

University of Illinois at Urbana-Champaign - Department of Business Administration

Charles M. Kahn

University of Illinois, Urbana-Champaign; Bank of Canada; Feseral Reserve Bank of Saint Louis

Date Written: November 1998

Abstract

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

Engelbrecht-Wiggans, Richard and Kahn, Charles M., Low Revenue Equilibria in Simultaneous Ascending Price Auctions (November 1998). University of Illinois, Bureau of Economics & Business Research, Working Paper No. 98-0121, Available at SSRN: https://ssrn.com/abstract=150596

Richard Engelbrecht-Wiggans (Contact Author)

University of Illinois at Urbana-Champaign - Department of Business Administration ( email )

1206 South Sixth Street
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Charles M. Kahn

University of Illinois, Urbana-Champaign ( email )

Department of Finance
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HOME PAGE: http://kahnfrance.com/cmk/

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