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Organizing Competition for the Market

Author

Listed:
  • Elisabetta Iossa
  • Patrick Rey
  • Michael Waterson

Abstract

The paper studies competition for the market in a setting where incumbents (and, to a lesser extent, neighboring incumbents) benefit from a cost advantage. The paper first compares the outcome of staggered and synchronous tenders, before drawing the implications for market design. We find that the timing of tenders should depend on the likelihood of monopolization. When monopolization is expected, synchronous tendering is preferable, as it strengthens the pressure that entrants exercise on the monopolist. When instead other firms remain active, staggered tendering is preferable, as it maximizes the competitive pressure that comes from the other firms.

Suggested Citation

  • Elisabetta Iossa & Patrick Rey & Michael Waterson, 2019. "Organizing Competition for the Market," GREEN Working Papers 03, GREEN, Centre for Research on Geography, Resources, Environment, Energy & Networks, Universita' Bocconi, Milano, Italy.
    • Handle: RePEc:bcu:greewp:greenwp03
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    File URL: https://repec.unibocconi.it/iefe/bcu/papers/GREEN_wp03.pdf
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    More about this item

    Keywords

    Dynamic procurement; incumbency advantage; local monopoly; competition; asymmetric auctions; synchronous contracts; staggered contracts;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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