Entry Deterrence and Free Riding in License Auctions:Incumbent Heterogeneity and Monotonicity

Biung-Ghi Ju () and Seung Han Yoo

No 1802, Discussion Paper Series from Institute of Economic Research, Korea University

Abstract: We examine free riding for entry deterrence in license auctions with heterogeneous incumbents. We establish the monotonicity of randomized preemptive bidding equilibria: an incumbent with a higher entry-loss rate has greater free-riding incentive, choosing a lower deterring probability. We then identify conditions for the existence of a series of fully or partially participating equilibria such that two or more incumbents with bounded heterogeneity in their entry-loss rates participate in randomized preemptive bidding. As an application, we examine a simple case of a bipartite group of participating incumbents consisting of one "leader" and many "followers". We show that the policy of limiting the leader's participation (set-asides for entrants, limiting participation of incumbents with excessive market shares, etc.) may or may not increase entry probability.

Keywords: entry deterrence; free-rider problem; asymmetric auctions (search for similar items in EconPapers)
JEL-codes: D44 D47 L13 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-gth and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://econ.korea.ac.kr/~ri/WorkingPapers/w1802.pdf (application/pdf)

Related works:
Journal Article: Entry Deterrence and Free Riding in License Auctions: Incumbent Heterogeneity and Monotonicity (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iek:wpaper:1802

Access Statistics for this paper

More papers in Discussion Paper Series from Institute of Economic Research, Korea University Contact information at EDIRC.
Bibliographic data for series maintained by Kim, Jisoo ().