Title

When Less (Potential Demand) Is More (Revenue): Asymmetric Bidding Capacities In Divisible Good Auctions

Abstract

We show that asymmetry in bidders' capacity constraints plays an important role in inhibiting collusion and promoting competitive outcomes in multi-unit auctions in which the final value of the good is common knowledge. This effect appears to be related to the increased difficulty of coordination when there are significant differences between bidders. Due to its impact on collusive outcomes, asymmetry in bidding capacities has a more powerful impact on the seller's revenue than does the auction type. Consistent with the finding in Sade et al. (2006) that the discriminatory auction is more susceptible to collusion than the uniform-price auction, asymmetry in capacity constraints has a greater impact in discriminatory auctions. © Springer Science+Business Media, LLC 2006.

Publication Date

9-1-2006

Publication Title

Review of Finance

Volume

10

Issue

3

Number of Pages

389-416

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1007/s10679-006-9003-x

Socpus ID

33750320096 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/33750320096

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