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Auctions of Licences and Market Structure

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Author Info
Gustavo Rodríguez
Abstract

This paper studies sequential auctions of licences to operate in a market where those firms that obtain at least one licence then engage in a symmetric market game. I employ a new refinement of Nash equilibrium, the concept of {\sl Markovian recursively undominated equilibrium}. The unique solution satisfies the following properties: (i) when several firms own licences before the auction (incumbents), new entrants buy licences in each stage, and (ii) when there is no more than one incumbent, either the single firm preempts entry altogether or entry occurs in every stage, depending on the parameter configuration.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 209.

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Date of creation: Feb 1997
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Handle: RePEc:upf:upfgen:209

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Related research
Keywords: Auctions; game theory; industrial organization;

Find related papers by JEL classification:
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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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.:
  1. Paul R. Milgrom, 1985. "Auction Theory," Cowles Foundation Discussion Papers 779, Cowles Foundation, Yale University. [Downloadable!]
  2. Dasgupta, Partha & Gilbert, Richard & Stiglitz, Joseph, 1983. "Strategic Considerations in Invention and Innovation: The Case of Natural Resources," Econometrica, Econometric Society, vol. 51(5), pages 1439-48, September. [Downloadable!] (restricted)
  3. McMillan, John, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-62, Summer. [Downloadable!] (restricted)
  4. Carolyn Pitchik & Andrew Schotter, 1988. "Perfect Equilibria in Budget-Constrained Sequential Auctions: An Experimental Study," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 363-388, Autumn. [Downloadable!] (restricted)
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  5. Cramton, Peter C, 1995. "Money Out of Thin Air: The Nationwide Narrowband PCS Auction," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 4(2), pages 267-343, Summer.
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  6. Krishna, Kala, 1993. "Auctions with Endogenous Valuations: The Persistence of Monopoly Revisited," American Economic Review, American Economic Association, vol. 83(1), pages 147-60, March. [Downloadable!] (restricted)
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  7. Robert J. Weber, 1981. "Multiple-Object Auctions," Discussion Papers 496, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  8. Gilbert, Richard J & Newbery, David M G, 1982. "Preemptive Patenting and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 72(3), pages 514-26, June. [Downloadable!] (restricted)
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  1. Hakenes, Hendrik & Schnabel, Isabel, 2000. "License Auctions and Market Structure," Sonderforschungsbereich 504 Publications 01-21, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim. [Downloadable!]
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  2. Jehiel, Philippe & Moldovanu, Benny, 2001. "The European UMTS/IMT-2000 Licence Auctions," CEPR Discussion Papers 2810, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
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