Abstract
Even though auctions are capturing an increasing share of commerce, they are typically treated in the theoretical economics literature as isolated. That is, an auction is typically treated as a single seller facing multiple buyers or as a single buyer facing multiple sellers. In this paper, we review the state of the art of competition between auctions. We consider three different types of competition: competition between auctions, competition between formats, and competition between auctioneers vying for auction traffic. We highlight the newest experimental, statistical, and analytical methods in the analysis of competition between auctions.
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Notes
Milgrom (2004) contends that the defining event that changed the auction landscape towards consideration of multiple auction events was the rise of FCC spectrum auctions in the 1990s. We devote some space to package auctions in this review, but Internet auctions receive more attention here. These two events took place at precisely the same time—so the historical argument remains.
The factors that led to eBay dominating the electronic auction market in the United States over its much bigger rivals are numerous and complex. They cannot and should not be reduced to the closing rule decision and we do not wish to do so here. Nevertheless, it is clear that every single format decision (and other strategic decisions) made by eBay had to take into consideration the actions of its competitors, and in this case the format choice served to both differentiate eBay and to create a buzz about sniping. We would also like to emphasize that the implied omission of competition does not affect or detract from the results of Roth and Ockenfels. It only sheds a different light on the interpretation of their findings.
Many of these attributes may be difficult to express quantitatively, making it difficult to utilize multi-attribute auction mechanisms.
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Acknowledgement
Sadly, after the completion of this paper, our friend and co-author Michael Rothkopf suddenly passed away. Mike was a great scholar and one of the big experts in the areas of auctions. It has been a privilege to have Mike participate in this choice symposium and to co-author with him on this paper. We will miss his love and passion for research.
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This paper is based on the special session at the 7th Triennial Invitational Choice Symposium, at the Wharton School of Business, University of Pennsylvania, June 2007 (co-chaired by the first two authors).
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Haruvy, E., Popkowski Leszczyc, P.T.L., Carare, O. et al. Competition between auctions. Mark Lett 19, 431–448 (2008). https://doi.org/10.1007/s11002-008-9037-2
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DOI: https://doi.org/10.1007/s11002-008-9037-2