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Auctions with Endogenous Valuations: The Persistence of Monopoly Revisited

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Krishna, Kala

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Abstract

It is shown that the standard arguments for a monopoly to persist break down when many units of capacity become available sequentially. The reason is that deterring entry at one st age affects the cost of doing so in later stages. This force can be so powerful that entry is deterred only at the final stage. The persistence of monopoly or its erosion over time depends on the timi ng of arrival of capacity, the size of early versus subsequent capacity availability, the length of the capacity-acquisition stage relative to the life of the industry, and the discount factor. Copyright 1993 by American Economic Association.

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Publisher Info
Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 83 (1993)
Issue (Month): 1 (March)
Pages: 147-60
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Handle: RePEc:aea:aecrev:v:83:y:1993:i:1:p:147-60

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  1. Sudip Gupta, 2004. "Endogenous Asymmetry and Entry in Sequential Multi-Unit Auctions: Identification and Estimation," Econometric Society 2004 North American Summer Meetings 566, Econometric Society. [Downloadable!]
  2. Philippe Jehiel & Benny Moldovanu, 2005. "Allocative and Informational Externalities in Auctions and Related Mechanisms," Discussion Papers 142, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
    Other versions:
  3. Yongmin Chen & Chuan He, 2006. "Paid Placement: Advertising and Search on the Internet," Working Papers 06-02, NET Institute, revised Sep 2006. [Downloadable!]
  4. Peter Cramton & Andrzej Skrzypacz & Robert Wilson, 2007. "Revenues in the 700 MHz Spectrum Auction," Papers of Peter Cramton 07rev700, University of Maryland, Department of Economics - Peter Cramton, revised 2007. [Downloadable!]
  5. Norbäck, Pehr-Johan & Persson, Lars, 2003. "Endogenous Asset Ownership Structures in Deregulated Markets," Working Paper Series 604, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
  6. Vijay Krishna & Robert Rosenthal, 1995. "Simultaneous Auctions with Synergies," Game Theory and Information 9503004, EconWPA. [Downloadable!]
    Other versions:
  7. Hongjun Zhong, 2002. "postbid market interaction and auction choice," Microeconomics 0210002, EconWPA. [Downloadable!]
  8. Ian Gale, 1994. "Competition for scarce inputs: the case of airport takeoff and landing slots," Economic Review, Federal Reserve Bank of Cleveland, issue Q II, pages 18-25. [Downloadable!]
  9. Yongmin Chen & Ruqu Wang, 2005. "Market Design with Correlated Valuations," Working Papers 1034, Queen's University, Department of Economics. [Downloadable!]
    Other versions:
  10. Gustavo Rodríguez, 1997. "Auctions of Licences and Market Structure," Economics Working Papers 209, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  11. James Dana & Kathryn Spier, 2007. "Entry Deterrence in a Duopoly Market," Advances in Economic Analysis & Policy, Berkeley Electronic Press, vol. 7(1), pages 1653-1653. [Downloadable!] (restricted)
  12. Norbäck, Pehr-Johan & Persson, Lars, 2006. "The Organization of the Innovation Industry: Entrepreneurs, Venture Capitalists and Oligopolists," CEPR Discussion Papers 5449, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  13. Vincent Crawford & Ping-Sing Kuo, 2000. "A Dual Dutch Auction in Taipei: The Choice of Numeraire and Auction Form in Multi-Object Auctions with Bundling," University of California at San Diego, Economics Working Paper Series 2000-10, Department of Economics, UC San Diego. [Downloadable!]
    Other versions:
  14. Peter Eso & Volker Nocke & Lucy White, 2007. "Competition for Scarce Resources," Economics Series Working Papers 365, University of Oxford, Department of Economics. [Downloadable!]
  15. Czarnitzki, Dirk & Kraft, Kornelius, 2005. "License Expenditures of Incumbents and Potential Entrants : An Empirical Analysis of Firm Behavior," ZEW Discussion Papers 05-35, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  16. Essi Eerola & Niku Määttänen, 2003. "Strategic Alliances, Joint Investments, and Market Structure," Discussion Papers 871, The Research Institute of the Finnish Economy. [Downloadable!]
    Other versions:
  17. James D. Dana & Kathryn Spier, 2000. "Entry Deterrence in a Duopoly Model," Econometric Society World Congress 2000 Contributed Papers 1451, Econometric Society. [Downloadable!]
  18. Onderstal, S., 2002. "Auctions for extra capacity in an oligopolistic market with network effects," Discussion Paper 33, Tilburg University, Center for Economic Research. [Downloadable!]
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