Paul Klemperer ()
Law and Economics from EconWPA
The existence of a ‘bidding market’ is commonly cited as a reason to tolerate the creation or maintenance of highly concentrated markets. We discuss three erroneous arguments to that effect: the ‘consultants’ fallacy’ that ‘market power is impossible’, the ‘academics’ fallacy’ that (often) ‘market power does not matter’, and the ‘regulators’ fallacy’ that ‘intervention against pernicious market power is unnecessary’, in markets characterized by auctions or bidding processes. Furthermore we argue that the term ‘bidding market’ as it is widely used in antitrust is unhelpful or misleading. Auctions and bidding processes do have some special features—including their price formation processes, common-values behaviour, and bid-taker power—but the significance of these features has been overemphasized, and they often imply a need for stricter rather than more lenient competition policy.
Keywords: Bidding Markets; Auctions; Antitrust; Competition Policy; Bidding; Market Power; Private Values; Common Values; Anti-trust (search for similar items in EconPapers)
JEL-codes: K (search for similar items in EconPapers)
Note: Type of Document - pdf; pages: 40
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (6) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwple:0508007
Access Statistics for this paper
More papers in Law and Economics from EconWPA
Series data maintained by EconWPA ().