Advantaged Bidders in Franchise Auctions
AbstractConsider a government that auctions a franchise for, e.g., an airport, telecommunication network, or utility. Consider an 'incumbent bidder' that owns a complement or substitute. With an auction on the transfer (i.e. payment) to the government, the incumbent is advantaged.If the government regulates the market with an auction on the price asked to consumers, it depends who is advantaged. With complements, the incumbent is advantaged: it can set a lower price on the new franchise, as this increases the profit of the other. With substitutes, the incumbent is disadvantaged. In many settings, the advantage bidder always wins.
Download InfoIf 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.
Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 12-117/VIII.
Date of creation: 02 Nov 2012
Date of revision:
Contact details of provider:
Web page: http://www.tinbergen.nl
Franchising; auctions; advantaged bidders; incumbent; private supply; regulatory auctions;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion
- R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-17 (All new papers)
- NEP-COM-2012-11-17 (Industrial Competition)
- NEP-MIC-2012-11-17 (Microeconomics)
- NEP-REG-2012-11-17 (Regulation)
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.:
- Verhoef, Erik T., 2007.
"Second-best road pricing through highway franchising,"
Journal of Urban Economics,
Elsevier, vol. 62(2), pages 337-361, September.
- Erik T. Verhoef, 2005. "Second-best Road Pricing Through Highway Franchising," Tinbergen Institute Discussion Papers 05-082/3, Tinbergen Institute.
- Kleven, Henrik Jacobsen & Kreiner, Claus Thustrup, 2006.
"The marginal cost of public funds: Hours of work versus labor force participation,"
Journal of Public Economics,
Elsevier, vol. 90(10-11), pages 1955-1973, November.
- Kleven, Henrik & Kreiner, Claus Thustrup, 2006. "The Marginal Cost of Public Funds: Hours of Work versus Labor Force Participation," CEPR Discussion Papers 5594, C.E.P.R. Discussion Papers.
- Jeremy Bulow & Ming Huang & Paul Klemperer, 1996.
"Toeholds and Takeovers,"
- Paul Klemperer & Jeremy Bulow, 1998. "Toeholds and Takeovers," Economics Series Working Papers 1998-W04, University of Oxford, Department of Economics.
- Bulow, Jeremy I & Huang, Ming & Klemperer, Paul, 1996. "Toeholds and Takeovers," CEPR Discussion Papers 1486, C.E.P.R. Discussion Papers.
- Jeremy Bulow & Ming Huang & Paul Klemperer, 1999. "Toeholds and Takeovers," Finance 9903005, EconWPA.
- Burkart, Mike, 1995. " Initial Shareholdings and Overbidding in Takeover Contests," Journal of Finance, American Finance Association, vol. 50(5), pages 1491-1515, December.
- Jacob K. Goeree & Theo Offerman, 2004. "Notes and Comments the Amsterdam Auction," Econometrica, Econometric Society, vol. 72(1), pages 281-294, 01.
- Browning, Edgar K, 1976. "The Marginal Cost of Public Funds," Journal of Political Economy, University of Chicago Press, vol. 84(2), pages 283-98, April.
- Waehrer, Keith, 1999. "Asymmetric private values auctions with application to joint bidding and mergers," International Journal of Industrial Organization, Elsevier, vol. 17(3), pages 437-452, April.
- Vijay Krishna & Robert Rosenthal, 1995.
"Simultaneous Auctions with Synergies,"
Game Theory and Information
- Thomas W. Hazlett & Roberto E. Muñoz, 2009. "A welfare analysis of spectrum allocation policies," RAND Journal of Economics, RAND Corporation, vol. 40(3), pages 424-454.
- Estelle Cantillon, 2000.
"The Effect of Bidders' Asymmetries on Expected Revenue in Auctions,"
Cowles Foundation Discussion Papers
1279, Cowles Foundation for Research in Economics, Yale University.
- Cantillon, Estelle, 2008. "The effect of bidders' asymmetries on expected revenue in auctions," Games and Economic Behavior, Elsevier, vol. 62(1), pages 1-25, January.
- Estelle Cantillon, 2008. "The effect of bidders' asymmetries on expected revenue in auctions," ULB Institutional Repository 2013/9001, ULB -- Universite Libre de Bruxelles.
- Paul Klemperer, 2004.
"Auctions: Theory and Practice,"
2004-W09, Economics Group, Nuffield College, University of Oxford.
- Klemperer, Paul, 1998.
"Auctions with almost common values: The 'Wallet Game' and its applications,"
European Economic Review,
Elsevier, vol. 42(3-5), pages 757-769, May.
- Paul Klemperer, 1997. "Auctions with Almost Common Values: The Wallet Game and its Applications," Economics Series Working Papers 1998-W03, University of Oxford, Department of Economics.
- Paul Klemperer, 2004.
"Introduction to Auctions: Theory and Practice
[Auctions: Theory and Practice]," Introductory Chapters, Princeton University Press.
- John Asker & Estelle Cantillon, 2010.
"Procurement when Price and Quality Matter,"
ULB Institutional Repository
2013/99378, ULB -- Universite Libre de Bruxelles.
- John Asker & Estelle Cantillon, 2006. "Procurement When Price and Quality Matter," Working Papers 06-24, New York University, Leonard N. Stern School of Business, Department of Economics.
- Asker, John & Cantillon, Estelle, 2007. "Procurement when Price and Quality Matter," CEPR Discussion Papers 6082, C.E.P.R. Discussion Papers.
- Vincent A.C. van den Berg, 2012.
"Auctions for Private Congestible Infrastructures,"
Tinbergen Institute Discussion Papers
12-087/VIII, Tinbergen Institute, revised 19 Oct 2012.
- Michael H. Rothkopf & Ronald M. Harstad & Yuhong Fu, 2003. "Is Subsidizing Inefficient Bidders Actually Costly?," Management Science, INFORMS, vol. 49(1), pages 71-84, January.
- Jacob K. Goeree & Emiel Maasland & Sander Onderstal & John L. Turner, 2005. "How (Not) to Raise Money," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 897-926, August.
- Gal-Or, Esther, 1985. "First Mover and Second Mover Advantages," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 649-53, October.
- McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
- Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, October.
- Rosenthal, Robert W. & Wang, Ruqu, 1996.
"Simultaneous Auctions with Synergies and Common Values,"
Games and Economic Behavior,
Elsevier, vol. 17(1), pages 32-55, November.
- Robert W. Rosenthal & Ruqu Wang, 1995. "Simultaneous Auctions with Synergies and Common Values," Papers 0060, Boston University - Industry Studies Programme.
- Economides, Nicholas & Salop, Steven C, 1992. "Competition and Integration among Complements, and Network Market Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 105-23, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antoine Maartens (+31 626 - 160 892)).
If references are entirely missing, you can add them using this form.