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Allocating essential inputs

Patrick Rey () and David Salant ()

No 17-820, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: Regulators must often allocate essential inputs, such as spectrum rights, transmission capacity or airport landing slots, which can transform the structure of the downstream market. These decisions involve a trade-off, as provisions aimed at fostering competition and lowering prices for consumers, also tend to limit the proceeds from the sale of the inputs. We first characterize the optimal allocation, from the standpoints of consumer and total welfare. We then note that standard auctions yield substantially different outcomes. Finally, we show how various regulatory instruments can be used to implement the desired allocation.

Keywords: Auctions; Market design; Essential inputs; Regulation; Antitrust (search for similar items in EconPapers)
JEL-codes: D43 D44 D47 D61 L13 L42 L43 L51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-des, nep-mic, nep-mkt and nep-reg
Date: 2017-06, Revised 2019-06
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