Working Paper: NBER ID: w28602
Authors: John Asker; Mariagiovanna Baccara; Sangmok Lee
Abstract: Auctioneers of patents are observed to allow joint bidding by coalitions of buyers. These auctions are distinguished by the good for sale being non-rivalrous, but still excludable, in consumption{that is, they auctions of club goods. This affects how coalitional bidding impacts auction performance. We study the implications of coalitions of bidders on second-price (or equivalently, ascending-price) auctions. Although the formation of coalitions can benefit the seller, we show that stable coalition profiles tend to consist of excessively large coalitions, to the detriment of both auction revenue and social welfare. Limiting the permitted coalition size increases efficiency and confers benefits on the seller. Lastly, we compare the revenues generated by patent auctions and multi-license auctions, and we find that the latter are superior in a large class of environments.
Keywords: No keywords provided
JEL Codes: D44; D47; K21; L14; L24; L4; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| coalition formation (C71) | bidders' valuations (D44) |
| bidders' valuations (D44) | auction revenues (D44) |
| coalition size (D74) | auction outcomes (D44) |
| excessively large coalitions (D74) | seller's revenue (D49) |
| limiting coalition size (C71) | auction performance (D44) |
| auction format (D44) | revenue outcomes (H27) |