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Do Auctions and Forced Divestitures increase Competition?

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Author Info

  • Adriaan R. Soetevent

    ()
    (Amsterdam School of Economics, University of Amsterdam)

  • Marco A. Haan

    ()
    (University of Groningen)

  • Pim Heijnen

    ()
    (Amsterdam School of Economics, University of Amsterdam)

Abstract

Where markets are insufficiently competitive, governments can intervene by auctioninglicenses to operate or by forcing divestitures. The Dutch government has doneexactly that, organizing auctions to redistribute tenancy rights for highway gasolinestations and forcing the divestiture of outlets of four majors. We evaluate this policyexperiment using panel data containing detailed price information. We find that anobligation to divest lowers prices by over 2% while the auctioning of licenses withoutsuch an obligation has no discernible effect. We find weak evidence for price effects onnearby competitors.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 08-117/1.

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Date of creation: 08 Dec 2008
Date of revision: 02 Aug 2011
Handle: RePEc:dgr:uvatin:20080117

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Web page: http://www.tinbergen.nl

Related research

Keywords: Divestitures; Auctions; Entry; Policy Evaluation;

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  1. Abrantes-Metz, Rosa M. & Froeb, Luke M. & Geweke, John & Taylor, Christopher T., 2006. "A variance screen for collusion," International Journal of Industrial Organization, Elsevier, vol. 24(3), pages 467-486, May.
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Cited by:
  1. Lach, Saul & Moraga, Jose L., 2009. "Asymmetric price effects of competition," IESE Research Papers D/797, IESE Business School.
  2. Pim Heijnen & Marco A. Haan & Adriaan R. Soetevent, 2012. "Screening for Collusion: A Spatial Statistics Approach," Tinbergen Institute Discussion Papers 12-058/1, Tinbergen Institute.

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