IDEAS home Printed from https://ideas.repec.org/a/ecj/econjl/v120y2010i549p1319-1344.html

Do auctions select efficient firms?

Author

Listed:
  • Maarten C.W. Janssen
  • Vladimir A. Karamychev

Abstract

We consider a government auctioning off multiple licences to firms that compete in an aftermarket. Firms have different costs, and cost-efficiency is private information in the auction and in the aftermarket. If only one licence is auctioned, standard results say that the most efficient firm wins the auction as it has the highest valuation for the licence. We analyse conditions under which this result does and does not generalise to the case of auctioning multiple licences and aftermarket competition. Strategic interaction in the aftermarket is responsible for the fact that auctions may select inefficient firms. Copyright (C) The Author(s). Journal compilation (C) Royal Economic Society 2009.

Suggested Citation

  • Maarten C.W. Janssen & Vladimir A. Karamychev, 2010. "Do auctions select efficient firms?," Economic Journal, Royal Economic Society, vol. 120(549), pages 1319-1344, December.
    • Handle: RePEc:ecj:econjl:v:120:y:2010:i:549:p:1319-1344
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    Other versions of this item:

    Citations

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


    Cited by:

    1. Onur A. Koska & Ilke Onur & Frank Stähler, 2018. "The scope of auctions in the presence of downstream interactions and information externalities," Journal of Economics, Springer, vol. 125(2), pages 107-136, October.
    2. Onur A. Koska, 2016. "A Consumer-Surplus Standard in Merger Approvals, Foreign Direct Investment, and Welfare," ERC Working Papers 1612, ERC - Economic Research Center, Middle East Technical University, revised Oct 2016.
    3. Bichler, Martin & Gretschko, Vitali & Janssen, Maarten, 2017. "Bargaining in spectrum auctions: A review of the German auction in 2015," Telecommunications Policy, Elsevier, vol. 41(5), pages 325-340.
    4. Wang, Xu & Liu, Yingjie & Li, Wei & He, Lingyun & Chi, Cheng & Zhong, Yanni, 2025. "Market-based emissions regulation and capacity governance in China’s high-carbon firms: Theoretical investigation and empirical evidence," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 1-17.
    5. Onur A. Koska, 2019. "A consumer-surplus standard in foreign acquisitions, foreign direct investment, and welfare," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(1), pages 149-179, February.
    6. Péter Eső & Volker Nocke & Lucy White, 2010. "Competition for scarce resources," RAND Journal of Economics, RAND Corporation, vol. 41(3), pages 524-548, September.
    7. Simon Finster & Patrick Loiseau & Simon Mauras & Mathieu Molina & Bary Pradelski, 2025. "Equitable Auctions," Post-Print hal-05225702, HAL.
    8. Janssen, Maarten & Karamychev, Vladimir, 2017. "Raising rivals’ cost in multi-unit auctions," International Journal of Industrial Organization, Elsevier, vol. 50(C), pages 473-490.
    9. Wang Tao & Wang Ruqu, 2018. "Limited Liability and High Bids in English Auctions," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 18(2), pages 1-12, July.
    10. Maarten C. W. Janssen & Vladimir A. Karamychev & Emiel Maasland, 2010. "Simultaneous Pooled Auctions with Multiple Bids and Preference Lists," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 166(2), pages 286-298, June.
    11. Janssen, Maarten & Karamychev, Vladimir, 2016. "Spiteful bidding and gaming in combinatorial clock auctions," Games and Economic Behavior, Elsevier, vol. 100(C), pages 186-207.
    12. Rey, Patrick & Salant, David, 2017. "Allocating essential inputs," TSE Working Papers 17-820, Toulouse School of Economics (TSE), revised Jun 2019.
    13. Maarten Janssen & Vladimir Karamychev, 2013. "Gaming in Combinatorial Clock Auctions," Tinbergen Institute Discussion Papers 13-027/VII, Tinbergen Institute, revised 16 Dec 2013.
    14. Maarten Janssen & Vladimir A. Karamychev & Emiel Maasland, 2009. "Auctions with Flexible Entry Fees," Tinbergen Institute Discussion Papers 09-109/1, Tinbergen Institute.
    15. Kasberger, Bernhard, 2023. "When can auctions maximize post-auction welfare?," International Journal of Industrial Organization, Elsevier, vol. 89(C).

    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecj:econjl:v:120:y:2010:i:549:p:1319-1344. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley-Blackwell Digital Licensing or Christopher F. Baum (email available below). General contact details of provider: https://edirc.repec.org/data/resssea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.