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Auctions to implement the efficient market structure

  • Gebhardt, Georg
  • Wambach, Achim

We consider a regulator who does not know how many firms should be granted a license to enter a market as he has limited information on their setup costs. We propose two auction formats which implement the efficient market structure. In a "jumping English auction" the price for a license increases continuously most of the times, but jumps at pre-specified points. After each jump, the number of winning bids is increased by one. The second auction is a multi unit auction based on the design of the UMTS auction in Austria and Germany, where firms can bid on more or less packages.

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Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 26 (2008)
Issue (Month): 3 (May)
Pages: 846-859

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Handle: RePEc:eee:indorg:v:26:y:2008:i:3:p:846-859
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505551

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  1. Kala Krishna, 1999. "Auctions with endogenous valuations: the snowball effect revisited," Economic Theory, Springer, vol. 13(2), pages 377-391.
  2. Philippe Jehiel & Benny Moldovanu, 1998. "Efficient Design with Interdependent Valuations," Discussion Papers 1244, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
  4. Kamien, Morton I., 1992. "Patent licensing," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 11, pages 331-354 Elsevier.
  5. Thomas G. McGuire & Michael H. Riordan, 1991. "Incomplete Information and Optimal Market Structure: Public Purchases from Private Providers," Papers 0010, Boston University - Industry Studies Programme.
  6. Brusco, Sandro & Lopomo, Giuseppe, 2002. "Collusion via Signalling in Simultaneous Ascending Bid Auctions with Heterogeneous Objects, with and without Complementarities," Review of Economic Studies, Wiley Blackwell, vol. 69(2), pages 407-36, April.
  7. Peter Cramton, 1997. "The FCC Spectrum Auctions: An Early Assessment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 431-495, 09.
  8. 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.
  9. Dana, James Jr. & Spier, Kathryn E., 1994. "Designing a private industry : Government auctions with endogenous market structure," Journal of Public Economics, Elsevier, vol. 53(1), pages 127-147, January.
  10. Moldovanu, Benny & Ewerhart II, Christian, 2002. "A Stylized Model of the German UMTS Auction," Sonderforschungsbereich 504 Publications 02-07, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  11. Richard L. Fullerton & R. Preston McAfee, 1999. "Auctioning Entry into Tournaments," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 573-605, June.
  12. Michel Mougeot & Florence Naegelen, 2005. "Designing A Market Structure When Firms Compete For The Right To Serve The Market," Journal of Industrial Economics, Wiley Blackwell, vol. 53(3), pages 393-416, 09.
  13. Bulow, Jeremy & Roberts, John, 1989. "The Simple Economics of Optimal Auctions," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1060-90, October.
  14. Auriol, Emmanuelle & Laffont, Jean-Jacques, 1992. "Regulation by Duopoly," IDEI Working Papers 20, Institut d'Économie Industrielle (IDEI), Toulouse.
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