Citation

Discussion Paper Details

Please find the details for DP13461 in an easy to copy and paste format below:

Full Details

Title: Organizing Competition for the Market

Author(s): Elisabetta Iossa, Patrick Rey and Michael Waterson

Publication Date: January 2019

Keyword(s): asymmetric auctions, Competition, Dynamic procurement, Incumbency Advantage, local monopoly, staggered contracts and synchronous contracts

Programme Area(s): Industrial Organization and Public Economics

Abstract: The paper studies competition for the market in a setting where incumbents (and, to a lesser extent, neighboring incumbents) benefit from a cost advantage. The paper first compares the outcome of staggered and synchronous tenders, before drawing the implications for market design. We find that the timing of tenders should depend on the likelihood of monopolization. When monopolization is expected, synchronous tendering is preferable, as it strengthens the pressure that entrants exercise on the monopolist. When instead other firms remain active, staggered tendering is preferable, as it maximizes the competitive pressure that comes from the other firms.

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Bibliographic Reference

Iossa, E, Rey, P and Waterson, M. 2019. 'Organizing Competition for the Market'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13461