TITLE:
The Regulation of All Pay Auctions: Is There Need for Greater Regulation of Online Auctioneers?
AUTHORS:
Michael D’Rosario
KEYWORDS:
Penny Auction, Game theory, Regulation
JOURNAL NAME:
Theoretical Economics Letters,
Vol.7 No.5,
July
21,
2017
ABSTRACT: Auctions are a ubiquitous process, with auctioneers
playing a critical role in serving as a bridge between buyers and sellers, and
as such assisting in the process of price discovery. Given this critical role,
the regulation of auctions and auctioneers is of particular concern. The
emergence of online selling has raised a number of pertinent questions about
how the industry should be regulated. In particular so-called penny auctions (in economic parlance “unit
bid auction”) have raised a number of pertinent questions about consumer protections.
Whether these online selling models constitute auctions, and whether they mirror
“bricks and mortar” rivals remain pertinent questions. Moreover, the adequacy
of the regulatory apparatus that moderates the activities of auctioneers
operating within conventional “analogue markets” is uncertain when such apparatus
is applied to “digital markets” involving online selling through auction like
processes. The current study considers need for regulation of unit bit auction
in light of the underlying economics of such auction models. The model suggests
that enhanced disclosure and greater regulation may ultimately be necessary.