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Incumbency and entry in License Auctions: The Anglo-Dutch auction meets another simple alternative

Azacis, Helmuts and Burguet, Roberto 2007. Incumbency and entry in License Auctions: The Anglo-Dutch auction meets another simple alternative. International Journal of Industrial Organization 26 (3) , pp. 730-745. 10.1016/j.ijindorg.2007.05.008

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Abstract

The existence of ex-ante strong incumbents may constitute a barrier to entry in auctions for goods such as licenses. Favoring the allocation to entrants is a way to induce entry and thus create competition. Designs such as the Anglo–Dutch auction have been proposed with this goal in mind. We first show that the Anglo–Dutch auction does indeed foster entry and increases the revenues of the seller. However, we argue that a more effective way could be to stage the allocation of the good so that each stage reveals information about the participants. We show that a sequence of English auctions, with high reserve prices in early rounds, fulfils this property and is more efficient than any one-stage entry auction. Moreover, it also outperforms the Anglo–Dutch auction in terms of seller's revenues.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > H Social Sciences (General)
Publisher: Elsevier
ISSN: 0167-7187
Last Modified: 04 Jun 2017 01:47
URI: http://orca-mwe.cf.ac.uk/id/eprint/2754

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