When Less (Potential Demand) is More (Revenue)

Download or read book When Less (Potential Demand) is More (Revenue) written by Orly Sade and published by . This book was released on 2005 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that asymmetry in bidders' capacity constraints plays an important role in inhibiting collusion and promoting competitive outcomes in multi-unit common value auctions. This effect seems to be related to the increased difficulty of coordination when there are fundamental differences between bidders. The discriminatory auction is shown to be more susceptible to collusion than is the uniform-price auction and consequently asymmetry in capacity constraints plays a more important role in the discriminatory auction. These results suggest that the revenue maximizing auction format may depend heavily on a variety of factors specific to particular auction settings.