Auctions of licences and market structure |
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Authors: | Gustavo E Rodriguez |
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Institution: | (1) Division of Social Sciences, Wagner College, Staten Island, NY 10301, USA (e-mail: rodrigus@attglobal.net) , US |
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Abstract: | Summary. This paper studies sequential auctions of licences to participate in a symmetric market game. Assuming that the rate at which
industry profits decrease with repeated entry is not too large, at the unique solution either a single firm preempts entry altogether or entry occurs in every stage, depending on the net benefit of complete preemption to an incumbent. If we relax the assumption, a third outcome can occur: two firms may coordinate their choices to avoid further entry. The
analysis employs a new refinement of Nash equilibrium, the concept of recursively undominated equilibrium.
Received: February 25, 2000; revised version: September 12, 2000 |
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Keywords: | and Phrases: Auctions Entry preemption Industrial organization |
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