Incumbency and Entry in License Auctions: The Anglo-Dutch Auction Meets Other Simple Alternatives
AbstractThe existence of ex-ante strong incumbents may constitute a barrier to entry in auctions for goods such as licenses. Introducing inefficiencies that favor 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 indeed the Anglo- Dutch auction fosters entry and increases the revenues of the seller. However, we argue that a more eective 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, is a procedure with this property that is more efficient than any one-stage entry auction. Moreover, it also dominates the Anglo-Dutch auction in terms of seller's revenues.
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Bibliographic InfoPaper provided by Cardiff University, Cardiff Business School, Economics Section in its series Cardiff Economics Working Papers with number E2005/11.
Length: 32 pages
Date of creation: Dec 2005
Date of revision:
Publication status: Published in International Journal of Industrial Organization , 26(3), pp. 730-745, May 2008
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Other versions of this item:
- Azacis, Helmuts & Burguet, Roberto, 2008. "Incumbency and entry in license auctions: The Anglo-Dutch auction meets another simple alternative," International Journal of Industrial Organization, Elsevier, vol. 26(3), pages 730-745, May.
- 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.
- NEP-ALL-2005-12-20 (All new papers)
- NEP-COM-2005-12-20 (Industrial Competition)
- NEP-MIC-2005-12-20 (Microeconomics)
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