Tender Auctions with Existing Operators Bidding
نویسنده
چکیده
Consider a government tendering a facility, such as an airport or utility, where one bidder owns a competing facility. With a “standard auction”, this “existing operator” bids above the auctioned facility’s expected profit, as winning means being a monopolist instead of a duopolist. This auction leads to an unregulated outcome which hurts welfare. A consumerprice auction can alleviate this problem. With complementing facilities, the existing operator offers a price below marginal cost and is more likely to win than other bidders; with substitutes, it is less likely to win. Often, the advantaged bidder always wins, eliminating competition for the field. *I am grateful for the comments of Harry van der Weijde, Sergej Gubins, Paul Koster, Alex Dimitropoulos, Hugo Silva, Erik Verhoef and Eva Gutiérrez. I would also like to thank the participants of the Eureka seminar (2012), NARSC (2012), NECTAR (2013) and KUHMO-NECTAR (2013) conferences. Financial support from the ERC (AdG Grant #246969 OPTION) is gratefully acknowledged. The usual disclaimer applies. 1 Tender auctions with existing operators bidding
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