Advanced Search
MyIDEAS: Login to save this paper or follow this series

Does Auctioning of Entry Licences Affect Consumers Prices? An Experimental Study

Contents:

Author Info

  • Offerman, T.J.S.
  • Potters, J.J.M.

    (Tilburg University, Center for Economic Research)

Abstract

On an increasing scale auctions are used to allocate the licenses to operate on markets which are thought not suited for free entry.According to standard economic arguments, the license fees paid at the auction will not affect consumer prices since they constitute a sunk cost.This standard view is not uncontested though.In the present paper we experimentally investigate two arguments for a potential upward effect of auctioning of prices: the incorporation of entry fees in prices due to the use of mark-up pricing rules, and the tendency of auctions to select the more collusive firms.Our results indicate that auctioning increases the probability of high prices, and that this is mainly due to the use of mark-up pricing rules.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://arno.uvt.nl/show.cgi?fid=4083
Our checks indicate that this address may not be valid because: 404 Not Found. If this is indeed the case, please notify (Richard Broekman)
Download Restriction: no

Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2000-53.

as in new window
Length:
Date of creation: 2000
Date of revision:
Handle: RePEc:dgr:kubcen:200053

Contact details of provider:
Web page: http://center.uvt.nl

Related research

Keywords:

Other versions of this item:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Selten, Reinhard & Stoecker, Rolf, 1986. "End behavior in sequences of finite Prisoner's Dilemma supergames A learning theory approach," Journal of Economic Behavior & Organization, Elsevier, vol. 7(1), pages 47-70, March.
  2. Theo Offerman & Jan Potters & Joep Sonnemans, 1997. "Imitation and Belief Learning in an Oligopoly Experiment," Tinbergen Institute Discussion Papers 97-116/1, Tinbergen Institute.
  3. Damme, E.E.C. van, 1997. "Tien misverstanden over veilingen," Open Access publications from Tilburg University urn:nbn:nl:ui:12-74221, Tilburg University.
  4. Potters, J.J.M. & Winden, F.A.A.M. van, 2000. "Professionals and students in a lobbying experiment - Professional rules of conduct and subject surrogacy," Open Access publications from Tilburg University urn:nbn:nl:ui:12-84634, Tilburg University.
  5. Kogut, Carl A. & Phillips, Owen R., 1994. "Individual decision making in an investment setting," Journal of Economic Behavior & Organization, Elsevier, vol. 25(3), pages 459-471, December.
  6. Crawford, Vincent & Broseta, Bruno, 1998. "What Price Coordination? The Efficiency-Enhancing Effect of Auctioning the Right to Play," American Economic Review, American Economic Association, vol. 88(1), pages 198-225, March.
  7. Van Huyck John B. & Battalio Raymond C. & Beil Richard O., 1993. "Asset Markets as an Equilibrium Selection Mechanism: Coordination Failure, Game Form Auctions, and Tacit Communication," Games and Economic Behavior, Elsevier, vol. 5(3), pages 485-504, July.
  8. De Bondt, Werner F. M. & Makhija, Anil K., 1988. "Throwing good money after bad? : Nuclear power plant investment decisions and the relevance of sunk costs," Journal of Economic Behavior & Organization, Elsevier, vol. 10(2), pages 173-199, September.
  9. Cachon, Gerard P & Camerer, Colin F, 1996. "Loss-Avoidance and Forward Induction in Experimental Coordination Games," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 165-94, February.
  10. Margaret E. Slade, 1995. "Empirical Games: The Oligopoly Case," Canadian Journal of Economics, Canadian Economics Association, vol. 28(2), pages 368-402, May.
  11. Oliver E. Williamson, 1976. "Franchise Bidding for Natural Monopolies -- in General and with Respect to CATV," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 73-104, Spring.
  12. van Dalen, Jan & Thurik, Roy, 1998. "A model of pricing behavior: An econometric case study," Journal of Economic Behavior & Organization, Elsevier, vol. 36(2), pages 177-195, August.
  13. McMillan, John, 1995. "Why auction the spectrum?," Telecommunications Policy, Elsevier, vol. 19(3), pages 191-199, April.
  14. Reinhard Selten & Michael Mitzkewitz & Gerald R. Uhlich, 1997. "Duopoly Strategies Programmed by Experienced Players," Econometrica, Econometric Society, vol. 65(3), pages 517-556, May.
  15. Dejong, Douglas V. & Forsythe, Robert & Uecker, Wilfred C., 1988. "A note on the use of businessmen as subjects in sealed offer markets," Journal of Economic Behavior & Organization, Elsevier, vol. 9(1), pages 87-100, January.
  16. Kogut, Carl A., 1990. "Consumer search behavior and sunk costs," Journal of Economic Behavior & Organization, Elsevier, vol. 14(3), pages 381-392, December.
  17. Blinder, Alan S, 1991. "Why Are Prices Sticky? Preliminary Results from an Interview Study," American Economic Review, American Economic Association, vol. 81(2), pages 89-96, May.
  18. Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-54, May.
  19. Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August.
  20. Nooteboom, B., 1985. "A mark-up model of retail margins," Open Access publications from Tilburg University urn:nbn:nl:ui:12-373080, Tilburg University.
  21. Abbink, Klaus & Abdolkarim Sadrieh, 1995. "RatImage - research Assistance Toolbox for Computer-Aided Human Behavior Experiments," Discussion Paper Serie B 325, University of Bonn, Germany.
  22. Cooper, Russell & Douglas V. DeJong & Robert Forsythe & Thomas W. Ross, 1993. "Forward Induction in the Battle-of-the-Sexes Games," American Economic Review, American Economic Association, vol. 83(5), pages 1303-16, December.
  23. Simon Hall & Mark Walsh & Anthony Yates, 1997. "How do UK companies set prices?," Bank of England working papers 67, Bank of England.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Damme, E.E.C. van & Pinkse, J., 2005. "Merger Simulation Analysis: An Academic Perspective," Discussion Paper 2005-013, Tilburg University, Tilburg Law and Economic Center.
  2. Bohnet, Iris & Kubler, Dorothea, 2005. "Compensating the cooperators: is sorting in the prisoner's dilemma possible?," Journal of Economic Behavior & Organization, Elsevier, vol. 56(1), pages 61-76, January.
  3. Janssen, Maarten C.W., 2006. "Auctions as coordination devices," European Economic Review, Elsevier, vol. 50(3), pages 517-532, April.
  4. Maarten C.W. Janssen, 2003. "Auctions as Collusion Devices," Tinbergen Institute Discussion Papers 03-017/1, Tinbergen Institute.
  5. Maarten C.W. Janssen & Vladimir A. Karamychev, 2005. "Auctions, Market Prices and the Risk Attitude Effect," Tinbergen Institute Discussion Papers 05-025/1, Tinbergen Institute.
  6. Harald Gruber, 2002. "Endogenous Sunk Costs in the Market for Mobile Telecommunications - The Role of Licence Fees," The Economic and Social Review, Economic and Social Studies, vol. 33(1), pages 55-64.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:dgr:kubcen:200053. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Richard Broekman).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.