Incumbency and entry in license auctions: The Anglo-Dutch auction meets another simple alternative
AbstractThe existence of ex-ante strong incumbents may constitute a barrier to entry in auctions for goods such as licenses. Favoring the allocation to entrants is a way to induce entry and thus create competition. Designs such as the Anglo-Dutch auction have been proposed with this goal in mind. We first show that the Anglo-Dutch auction does indeed foster entry and increases the revenues of the seller. However, we argue that a more effective way could be to stage the allocation of the good so that each stage reveals information about the participants. We show that a sequence of English auctions, with high reserve prices in early rounds, fulfils this property and is more efficient than any one-stage entry auction. Moreover, it also outperforms the Anglo-Dutch auction in terms of seller's revenues.
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Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Industrial Organization.
Volume (Year): 26 (2008)
Issue (Month): 3 (May)
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Web page: http://www.elsevier.com/locate/inca/505551
Other versions of this item:
- Azacis, Helmuts & Burguet, Roberto, 2005. "Incumbency and Entry in License Auctions: The Anglo-Dutch Auction Meets Other Simple Alternatives," Cardiff Economics Working Papers E2005/11, Cardiff University, Cardiff Business School, Economics Section.
- Helmuts Azacis & Roberto Burguet, 2005. "Incumbency and Entry in Licence Auctions: The Anglo-Dutch Auctions Meets other Simple Alternatives," Working Papers 223, Barcelona Graduate School of Economics.
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