Auctions of licences and market structure

Gustavo Rodríguez

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: This paper studies sequential auctions of licences to operate in a market where those firms that obtain at least one licence then engage in a symmetric market game. I employ a new refinement of Nash equilibrium, the concept of {\sl Markovian recursively undominated equilibrium}. The unique solution satisfies the following properties: (i) when several firms own licences before the auction (incumbents), new entrants buy licences in each stage, and (ii) when there is no more than one incumbent, either the single firm preempts entry altogether or entry occurs in every stage, depending on the parameter configuration.

Keywords: Auctions; game theory; industrial organization (search for similar items in EconPapers)
JEL-codes: C72 D44 (search for similar items in EconPapers)
Date: 1997-02
New Economics Papers: this item is included in nep-env, nep-gth and nep-mic
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:209

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