Chapter 23 Some Results on Anti-Competitive Behavior in Multi-Unit Ascending Price Auctions

This chapter focuses on the some results on anti-competitive behavior in multi-unit ascending price auctions. Depending on the environment and institutional details, demand reduction and bidder collusion may occur under both ascending-price and sealed bid type markets. The chapter focuses on ascending price auctions; results on the sealed bids are mentioned only for comparison. Unless stated otherwise, it considers independent, private value auctions. Two frequently discussed kinds of anti-competitive behavior in multi-object auction markets are demand reduction and bidder collusion. Although the two are closely interrelated, distinction is often made along the following lines. Demand reduction occurs due to monopsony power of a buyer demanding multiple units of a homogeneous good in a uniform price auction. The buyer is essentially able to affect auction prices by reducing his or her demand. Coordination among buyers may not be necessary.