Saturday, December 22, 2012

2G Auction/high reserve fee


Telecom giants complaint before auction started that the reserve fee too high

What is reserve fee??

The reserve fee is simply the starting point of bidding. No bidding can be made below this price. If bidding doesn’t push the price up then the item is sold at the reserve price. However if the bidding intensity is high then the final price could go much higher than the reserve price

Advantage of low reserve price:

Lower the reserve price --> more and more bidders participation in the auction --> more extensive participation --> more comprehensive price discovery of the resource --> more successful auction