Incumbency and Entry in Licence Auctions: The Anglo-Dutch Auctions Meets other Simple Alternatives

Helmuts Azacis and Roberto Burguet

No 223, Working Papers from Barcelona School of Economics

Abstract: The existence of ex-ante strong incumbents is a barrier to entry in auctions for goods such as licenses. Introducing inefficiencies that favor entrants is a way to induce entry and thus create competition. Designs such as the Anglo-Dutch auction have been proposed with this goal in mind. We first show that indeed the Anglo-Dutch auction fosters entry and increases the revenues of the seller. However, we argue that a more effective way could be to stage the allocation of the good so that each stage reveals information about the participants. We show that a sequence of English auctions, with high reserve prices in early rounds, is a procedure with this property that is more efficient than any one-stage entry auction. Moreover, it also dominates the Anglo-Dutch auction in terms of seller's revenues.

Date: 2005-07
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Related works:
Journal Article: Incumbency and entry in license auctions: The Anglo-Dutch auction meets another simple alternative (2008)
Working Paper: Incumbency and Entry in License Auctions: The Anglo-Dutch Auction Meets Other Simple Alternatives (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:223

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