EconPapers    
Economics at your fingertips  
 

Efficient Competition With Small Numbers -- With Applications to Privatisation and Mergers

Kala Krishna (kmk4@psu.edu) and Torben Tranaes (ttr@vive.dk)

No 6952, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies competition between a small number of suppliers and a single buyer (or an auction with a small number of bidders and a single seller), when total demand (supply) is uncertain. It is well known that when a small number of suppliers compete in supply functions the service is not provided efficiently. We show that production efficiency is obtained if suppliers compete in simple two-part bid functions. However, profits are not eliminated. Moreover, the buyers' (sellers') decision regarding how much to buy is not efficient. We also show that suppliers (bidders in an auction) always have an incentive to merge (form bidding rings) in this setting.

JEL-codes: D4 L5 (search for similar items in EconPapers)
Date: 1999-02
New Economics Papers: this item is included in nep-mic
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w6952.pdf (application/pdf)

Related works:
Working Paper: Efficient Competition with Small Numbers - with Applications to Privatisation and Mergers (1999) Downloads
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:6952

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w6952

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 (wpc@nber.org).

 
Page updated 2025-03-19
Handle: RePEc:nbr:nberwo:6952