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Auctions with endogenous valuations: the snowball effect revisited

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Author Info

  • Kala Krishna

    ()
    (Department of Economics, Pennsylvania State University, Kern Graduate Building, University Park, PA 16802, USA)

Abstract

This paper looks at the determination of ownership of capacity when there are two ex-ante symmetric agents bidding for many units of capacity which are sold sequentially. It is shown that convexity of payoffs in the final stage of the game is sufficient to ensure monopolization of capacity, but that increasing returns to scale are not sufficient to ensure monopolization.

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Bibliographic Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 13 (1999)
Issue (Month): 2 ()
Pages: 377-391

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Handle: RePEc:spr:joecth:v:13:y:1999:i:2:p:377-391

Note: Received: March 14, 1997; revised version: December 1, 1997
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Related research

Keywords: Sequential auctions · Endogenous valuations · Evolution of market structure.;

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References

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  1. Carolyn Pitchik, 1989. "Budget-Constrained Sequential Auctions With Incomplete Information," STICERD - Theoretical Economics Paper Series 201, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  2. Ashenfelter, Orley, 1989. "How Auctions Work for Wine and Art," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 23-36, Summer.
  3. Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February.
  4. Eric S. Maskin & John G. Riley, 1981. "Multi-unit Auctions, Price Discrimination and Bundling," UCLA Economics Working Papers 201, UCLA Department of Economics.
  5. repec:fth:harver:1484 is not listed on IDEAS
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Citations

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Cited by:
  1. Gale, Ian L. & Stegeman, Mark, 2001. "Sequential Auctions of Endogenously Valued Objects," Games and Economic Behavior, Elsevier, vol. 36(1), pages 74-103, July.
  2. Carolyn Pitchik, 1989. "Budget-Constrained Sequential Auctions With Incomplete Information," STICERD - Theoretical Economics Paper Series 201, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  3. Eerola, Essi & Määttänen, Niku, 2003. "Strategic Alliances, Joint Investments, and Market Structure," Discussion Papers 871, The Research Institute of the Finnish Economy.
  4. van Damme, Eric, 2002. "The European UMTS-auctions," European Economic Review, Elsevier, vol. 46(4-5), pages 846-858, May.
  5. repec:ebl:ecbull:v:30:y:2010:i:1:p:429-436 is not listed on IDEAS
  6. Larue, Bruno & Gervais, Jean-Philippe & Pouliot, Sebastien, 2007. "Should tariff-rate quotas mimic quotas?: Implications for trade liberalization under a supply management policy," The North American Journal of Economics and Finance, Elsevier, vol. 18(3), pages 247-261, December.
  7. Gebhardt, Georg & Wambach, Achim, 2008. "Auctions to implement the efficient market structure," International Journal of Industrial Organization, Elsevier, vol. 26(3), pages 846-859, May.
  8. Jeddy, Mohamed & Larue, Bruno, 2012. "Mergers, concurrent marketing mechanisms and the performance of sequential auctions," Working Papers 126945, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
  9. Onderstal, A.M., 2002. "Auctions for Extra Capacity in an Oligopolistic Market with Network Effects," Discussion Paper 2002-33, Tilburg University, Center for Economic Research.
  10. Das Varma, Gopal, 2003. "Bidding for a process innovation under alternative modes of competition," International Journal of Industrial Organization, Elsevier, vol. 21(1), pages 15-37, January.

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