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Ascending Auctions

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Abstract

A key question of auction design is whether to use an ascending- bid or a sealed-bid format. The critical distinction between formats is that an ascending auction provides the bidders with information through the process of bidding. This information is a two-edged sword. It may stimulate competition by creating a reliable process of price discovery, by reducing the winner's curse, and by allowing efficient aggregations of items. Alternatively, the information may be used by bidders to establish and enforce collusive outcomes. Ex ante asymmetries and weak competition favor a sealed-bid design. In other cases, an ascending auction is likely to perform better in efficiency and revenue terms. Moreover, information in an ascending auction can be tailored to limit collusion.

Suggested Citation

  • Peter Cramton, 1998. "Ascending Auctions," Papers of Peter Cramton 98eer, University of Maryland, Department of Economics - Peter Cramton, revised 28 Jul 1998.
    • Handle: RePEc:pcc:pccumd:98eer
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    More about this item

    Keywords

    Auctions; Multiple-Item Auctions; Spectrum Auctions;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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