Making uncompetitive auctions competitive: a survey of experiments

In the past 15 years, governments around the world have often used auctions to sellscarce licenses to operate in markets. In many of these auctions, the number of interestedcompetitors is relatively small compared to the number of available licenses. Auctiondesign is crucial in such uncompetitive circumstances. Details of the design a¤ect par-ticipants’ decisions to compete seriously or not. Such decisions are important for theindustry structure and the e¢ ciency of the aftermarket as well as for the revenue raisedin the auction. This paper provides a survey of emerging experimental work on the ques-tion how competition can be stimulated in uncompetitive license auctions. We considerpapers that deal with the performance of standard auctions (such as the simultaneousascending auction and the discriminative auction) in uncompetitive circumstances. Wealso discuss papers that investigate the performance of some less known auctions (such asthe Anglo-Dutch auction, the Amsterdam auction, and Right-To-Choose auctions) thatactively seek to foster competition among bidders who would not compete in standardauctions.