License Auctions and Market Structure

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URL:	https://ub-madoc.bib.uni-mannheim.de/2805
URN:	urn:nbn:de:bsz:180-madoc-28059
Document Type:	Working paper
Year of publication:	2000
The title of a journal, publication series:	Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung
Volume:	01-21
Place of publication:	Mannheim
Publication language:	English
Institution:	School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series:	Sonderforschungsbereich 504 > Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung (Laufzeit 1997 - 2008)
Subject:	330 Economics
Subject headings (SWD):	Europa , Konzession , Lizenzvergabe , Auktionstheorie , Marktstruktur , Mobile Telekommunikation , Wettbewerb
Abstract:	We analyze the interplay between license auctions and market structure in a model with several incumbents and several potential entrants. The focus is on the competitiveness induced by the number of auctioned licenses. Moreover, we study how the auction format affects the incentives for explicit or tacit collusion among incumbents. A crucial role is played by the relation between the number of incumbents and the number of licenses. If the number of incumbents is greater than the number of new licenses, we show that auctioning more licenses need not result in greater competitiveness. If the number of licenses exceeds the number of incumbents, we display plausible conditions under which all incumbents get a license. Finally, we suggest a positive role for some auction formats in which the number of licenses is endogenously determined at the auction. We illustrate some results with examples drawn from European license auctions for 3G mobile telephony.