Auctions of licences and market structure

Gustavo E. Rodriguez ()
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Gustavo E. Rodriguez: Division of Social Sciences, Wagner College, Staten Island, NY 10301, USA

Economic Theory, 2002, vol. 19, issue 2, 283-309

Abstract: This paper studies sequential auctions of licences to participate in a symmetric market game. Assuming that the rate at which industry profits decrease with repeated entry is not too large, at the unique solution either a single firm preempts entry altogether or entry occurs in every stage, depending on the net benefit of complete preemption to an incumbent. If we relax the assumption, a third outcome can occur: two firms may coordinate their choices to avoid further entry. The analysis employs a new refinement of Nash equilibrium, the concept of recursively undominated equilibrium.

Keywords: Auctions; Entry preemption; Industrial organization. (search for similar items in EconPapers)
JEL-codes: D4 D43 D44 L1 (search for similar items in EconPapers)
Date: 2001-10-29
Note: Received: February 25, 2000; revised version: September 12, 2000
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