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Strategic Bidding by Potential Competitors: Will Monopoly Persist?

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Chen, Yongmin

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Abstract

Who will win the bidding to become the sole producer of a new product: the monopolist of a related product or a new entrant? When there exists potential entry to the monopolist's existing business, the standard result that monopoly persists (1982) may or may not hold, depending crucially on how the new product relates to the existing product of the monopolist. The monopolist tends to win the bidding and to dominate both products if the two products are strategic complements; and the entrant tends to win the bidding if the two products are strategic substitutes. Copyright 2000 by Blackwell Publishing Ltd

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Publisher Info
Article provided by Blackwell Publishing in its journal Journal of Industrial Economics.

Volume (Year): 48 (2000)
Issue (Month): 2 (June)
Pages: 161-75
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Handle: RePEc:bla:jindec:v:48:y:2000:i:2:p:161-75

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  1. Norbäck, Pehr-Johan & Persson, Lars, 2003. "Endogenous Asset Ownership Structures in Deregulated Markets," Working Paper Series 604, Research Institute of Industrial Economics. [Downloadable!]
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  2. Norbäck, Pehr-Johan & Persson, Lars, 2006. "The Organization of the Innovation Industry: Entrepreneurs, Venture Capitalists and Oligopolists," CEPR Discussion Papers 5449, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Yongmin Chen & Ruqu Wang, 2005. "Market Design with Correlated Valuations," Working Papers 1034, Queen's University, Department of Economics. [Downloadable!]
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  4. Yongmin Chen & Chuan He, 2006. "Paid Placement: Advertising and Search on the Internet," Working Papers 06-02, NET Institute, revised Sep 2006. [Downloadable!]
  5. Julio Peña Torres & Gabriel Fernández Aguirre, 2008. "Disuasión de Entrada Vía Subastas: Free Riding o Colusión?," ILADES-Georgetown University Working Papers inv215, Ilades-Georgetown University, School of Economics and Bussines. [Downloadable!]
  6. Czarnitzki, Dirk & Kraft, Kornelius, 2005. "License Expenditures of Incumbents and Potential Entrants : An Empirical Analysis of Firm Behavior," ZEW Discussion Papers 05-35, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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