The Case of the Vanishing Revenues: Auction Quotas with Monopoly

Kala Krishna ()

No 2840, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines the effects of auctioning quota licenses when monopoly power exists. With a foreign monopoly and domestic competition the sales of licenses will raise any revenue if domestic and foreign markets are segmented. More surprisingly, the inability to raise revenue is shown to persist even when partial or perfect arbitrage across markets is possible, as long as the quota is not too far from the free trade import level. In contrast, when there is a home monopoly and foreign competition, the price of a quota license can be positive so that selling licenses can dominate giving them away. However, because of the absence of any profit shifting, welfare falls even when licenses do indeed raise revenue.

Date: 1989-02
Note: ITI IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as The American Economic Review, Vol. 80, No. 4, pp. 828-836, (September 1990) .

Downloads: (external link)
http://www.nber.org/papers/w2840.pdf (application/pdf)

Related works:
Journal Article: The Case of the Vanishing Revenues: Auction Quotas with Monopoly (1990)
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:nbr:nberwo:2840

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w2840

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().