Making uncompetitive auctions competitive: a survey of experiments

In the past 15 years, governments around the world have often used auctions to sell
scarce licenses to operate in markets. In many of these auctions, the number of interested competitors is relatively small compared to the number of available licenses. Auction design is crucial in such uncompetitive circumstances. Details of the design a¤ect participants’ decisions to compete seriously or not. Such decisions are important for the industry structure and the e¢ ciency of the aftermarket as well as for the revenue raised in the auction. This paper provides a survey of emerging experimental work on the question how competition can be stimulated in uncompetitive license auctions. We consider papers that deal with the performance of standard auctions (such as the simultaneous
ascending auction and the discriminative auction) in uncompetitive circumstances. We also discuss papers that investigate the performance of some less known auctions (such as the Anglo-Dutch auction, the Amsterdam auction, and Right-To-Choose auctions) that actively seek to foster competition among bidders who would not compete in standard auctions.