Auctions of licences and market structure
AbstractThis paper studies sequential auctions of licences to participate in a symmetric market game. Assuming that the rate at which industry profits decrease with repeated entry is not too large, at the unique solution either a single firm preempts entry altogether or entry occurs in every stage, depending on the net benefit of complete preemption to an incumbent. If we relax the assumption, a third outcome can occur: two firms may coordinate their choices to avoid further entry. The analysis employs a new refinement of Nash equilibrium, the concept of recursively undominated equilibrium.
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Bibliographic InfoArticle provided by Springer in its journal Economic Theory.
Volume (Year): 19 (2002)
Issue (Month): 2 ()
Note: Received: February 25, 2000; revised version: September 12, 2000
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Web page: http://link.springer.de/link/service/journals/00199/index.htm
Find related papers by JEL classification:
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D4 - Microeconomics - - Market Structure and Pricing
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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