What Really Matters in Auction Design

The most important issues in auction design are the traditional concerns of competition policy-preventing collusive, predatory, and entry deterring behaviour. Ascending and uniform-price auctions are particularly vulnerable to these problems (we discuss radiospectrum and football TV-rights auctions, electricity markets, and takeover battles), and the Anglo-Dutch auction-a hybrid of the sealed-bid and ascending auctions-may often perform better. However, everything depends on the details of the context; the circumstances of the recent U.K. mobile-phone license auction made an ascending format ideal. We also discuss the current 3G spectrum auctions in Germany, the Netherlands and Italy. Auction design is a matter of horses for courses, not one size fits all.