Awarding monopoly franchises repeatedly: are second-best block-rate tariffs attainable without regulation?

Jörg Borrmann

Applied Economics, 2008, vol. 40, issue 12, 1519-1528

Abstract: Under economies of scale, Demsetz's (1968) proposal of franchise bidding results, at best, in uniform prices approaching average cost. This article questions the accepted belief that the auctioneer always needs to know the market demand function, if the concept is modified so as to allow for bids consisting of block-rate tariffs in order to increase welfare. Given a setting of repeated auctions, the auctioneer can apply a sequential mechanism to evaluate bids, instead of evaluating them in each auction independently. We characterize the conditions under which a second-best block-rate tariff for given thresholds is approached in equilibrium.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/00036840600829144 (text/html)
Access to full text is restricted to subscribers.

Related works:
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:taf:applec:v:40:y:2008:i:12:p:1519-1528

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036840600829144

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().