When Less (Potential Demand) Is More (Revenue): Asymmetric Bidding Capacities in Divisible Good Auctions | CU Experts

We show that asymmetry in bidders’ capacity; constraints plays an important role in inhibiting collusion and promoting; competitive outcomes in multi-unit auctions in which the final value of; the good is common knowledge. This effect appears to be related to the; increased difficulty of coordination when there are significant; differences between bidders. Due to its impact on collusive outcomes,; asymmetry in bidding capacities has a more powerful impact on the seller’s; revenue than does the auction type. Consistent with the finding in Sade et; al. (2006) that the discriminatory auction is more susceptible to; collusion than the uniform-price auction, asymmetry in capacity; constraints has a greater impact in discriminatory auctions. Copyright Oxford University Press 2006

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