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Strategic Bidding by Potential Competitors: Will Monopoly Persist?

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  • Chen, Yongmin

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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Bibliographic Info

Article provided by Wiley Blackwell 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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Cited by:
  1. Norbäck, Pehr-Johan & Persson, Lars, 2003. "Endogenous Asset Ownership Structures in Deregulated Markets," Working Paper Series, Research Institute of Industrial Economics 604, Research Institute of Industrial Economics.
  2. Yongmin Chen & Ruqu Wang, 2006. "Market Design with Correlated Valuations," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 73(292), pages 659-672, November.
  3. Norbäck, Pehr-Johan & Persson, Lars, 2004. "The Organization of the Innovation Industry: Entrepreneurs, Venture Capitalists, and Oligopolists," Working Paper Series, Research Institute of Industrial Economics 626, Research Institute of Industrial Economics.
  4. 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.
  5. Vincent A.C. van den Berg, 2013. "Tender Auctions with Existing Operators Bidding," Tinbergen Institute Discussion Papers 13-117/VIII, Tinbergen Institute.
  6. Yongmin Chen & Chuan He, 2006. "Paid Placement: Advertising and Search on the Internet," Working Papers, NET Institute 06-02, NET Institute, revised Sep 2006.
  7. Norbäck, Pehr-Johan & Persson, Lars & Svensson, Roger, 2009. "Creative Destruction and Productive Preemption," Working Paper Series, Research Institute of Industrial Economics 799, Research Institute of Industrial Economics.
  8. Yongmin Chen & Michael H. Riordan, 2008. "Price-increasing competition," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 1042-1058.
  9. Lynne Pepall & Daniel Richards, 2000. "Merger Wars: Bidding for Complementary Assets," Discussion Papers Series, Department of Economics, Tufts University, Department of Economics, Tufts University 0020, Department of Economics, Tufts University.
  10. Julio Peña Torres & Gabriel Fernández Aguirre, 2008. "Disuasión de Entrada Vía Subastas: Free Riding o Colusión?," ILADES-Georgetown University Working Papers, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines inv215, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
  11. Pepall, Lynne M. & Richards, Daniel J., 2006. "Advertising and bidding for television rights," Economics Letters, Elsevier, vol. 90(2), pages 237-241, February.

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