Examples: Airport slots, Bus routes, Radio spectra, ...
How many licenses to sell?
The government can choose the # of licenses to provide.
Auctions achieve e¢ ciency given the # of licenses.
Impossible to decide the optimal # prior to the auction.
“market competition” vs. “production e¢ ciency” (many licenses)
(few licenses)
Free entry is not e¢ cient Excess Entry Theorem The equilibrium # of …rms in an oligopoly market under free entry is greater than the e¢ cient # of …rms.
Symmetric …rms with …xed costs: Mankiw and Whinston (1986), Suzumura and Kiyono (1987)
Asymmetric …rms with no …xed cost: Lahiri and Ono (1988)
)Justi…cation of entry regulation. )Optimal regulation can be implemented by license auctions.
European UMTS (3G) Auctions
Most of the countries set a number of licenses: =
(
# of incumbents in 2G services 1 + # of —
Essentially, either “accepting a new entrant” or “not.”
)Better auction design?
Monopoly or Duopoly? Suppose a monopoly market. A government provides a second license or not: (
No additional license Provide a license
) Monopoly ) Duopoly
Either a monopoly or a duopoly can be e¢ cient. The costs are private information of the …rms. )How to implement an optimal policy?
Mechanism Design Approach
VCG mechanism: simple but unworkable in our case (interdependent value, consumer surplus)
No e¢ cient mechanism under incomplete information.
Nash implementation (complete information): complicated, not observed in practice
)Impossible or too complicated in general settings.
The Benchmark Model
Homogenous good
Linear demand: p = a
2 …rms
(
Incumbent Newcomer
bq
: …rm 1 : …rm 2
Cournot competition
Constant marginal costs: ci; i = 1; 2
Welfare-Reducing Entry
Duopoly is more e¢ cient than monopoly i¤ c2 < c 1. where c = 5a+17c 22
(
c2 < c (low-cost) c2 > c (high-cost)
See the next …gures.
) Social Welfare " ) Social Welfare #
High-Cost or Low-Cost p
p A
Social welfare (when C2 is low)
Social welfare (when C2 is high) pm
D
Welfare gain
C2
C1 B q
C2 C
q Welfare loss
Figure 1: c2 is high (Left)
c2 is low (Right)
The Beauty Contest If the government knew the parameters a; c1; c2 ) optimal policy. Otherwise, what can we do? )Auctions?
English (ascending bid) auction: (
Firm 1 wins: Firm 2 wins:
) Monopoly ) Duopoly
Benchmark assumptions
The government maximizes social welfare. )Generalized social welfare.
The …rms’costs are common knowledge among …rms. )Asymmetric information.
The government can only control entry decision = No other regulation (price or quantity regulations)
Valuations for the license Each …rm’s valuation for the license: v1 = m v2 = 2
1
Truthful bidding is optimal. Entry occurs i¤ v1 < v2 , m )Does this mechanism achieve e¢ ciency?
1<
2
Symmetric Firms (c1= c2) A Duopoly is more e¢ cient than a monopoly. However, the incumbent wins (Gilbert and Newbery, 1982). The monopoly pro…t is larger than the joint pro…t under duopoly. m>
1
+ 2, m
1>
2
Some kind of handicap favoring a newcomer is needed. )Handicap auctions
Handicap (English) Auction with H
The auction stops when one …rm drops out.
The remaining bidder is the winner who obtains the license. )Similar to an English auction.
Only the payment of the newcomer is di¤erent. (
Incumbent: Newcomer:
Pay the winning price if it wins. Pay only H of the winning price if it wins
Jun 14, 2011 - The government can choose the of licenses to provide. " Auctions achieve ej ciency given the of licenses. " Impossible to decide the optimal .... Demand functions need not be globally linear. " Robustness: welfare loss caused ...
Title. Otsego County Tax Foreclosure Real Estate Auction. Description. Auction: Wednesday, August 16th 11AM. Registration at 9AM Location: Holiday Inn ...
School District. Ithaca. Public Water (District). Comm/public. Public Sewer (District). Comm/public ..... Federal tax liens are covered by the Code of Federal Rules.
Dec 6, 2016 - 2013 GEHL Z-27 Mini Hydraulic Excavator, Yanmar Dsl., OROPS,. Leveling Blade, Auxiliary Hydraulics, Rubber Tracks. 2005 JCB 804 Super Mini Excavator, SN SLP080405E0735617. CASE CX36B Mini Hydraulic Excavator, SN .... 11 HP/LP Gas, Dual
Now suppose that player 2 follows the above equilibrium strategy, and we shall check whether player 1 has an incentive to choose the same linear strategy (1). Player 1's optimization problem, given she received a valuation x1, is max b1. (x1 â b1)
Bidder i's expected payoff, as a function of his bid bi and signal si is: U(bi,si)=(si â bi) · Pr [bj ... What is the revenue from the first price auction? It is the expected.
straints in the subsequent period; this reduced incen- tive to win is commensurate with higher bids. Campo et al. (2002) investigate an auction model with possi-.
What do I do? Check the number to be sure you entered it. correctly, including a zero at the beginning. Also note some cell phone carriers are. faster than others.
first or second price) cannot achieve an efficient outcome because the bids submitted by bidders 1 and 2 .... Call this strengthened version of A3, A3". ...... (1999): âAn Ex-Post Efficient Auction," Discussion Paper *200, Center for Rationality an
Apr 20, 2017 - Group, Prague. ... Email: [email protected] URL: ... for a privatized service that gives profits Ï(D, Ci) > 0 after the firm incurs in a setup cost ki, and .... Hernando-Veciana, Angel and Fabio Michelucci, âSecond best ...
... applicable since (v-x(v))z(s)f(slv). E L1([O, 1]2, X X G)) v E L2(A) 1Z(s)1(v-x(v))f(sIv). dG(v) ds = O iff. (by the Fundamental Lemma of the Calculus of Variations).
Vasiliki Skreta, New York University, Stern School oF Business* .... Our model allows for an elegant description of a large number of allocation problems because it allows for .... AT&T wireless for $41 billion after a bidding war with Vodafone.
Improved Design for Multi-Objective Iterative Auctions, Caltech Social Science. Working Paper No. 1054 (California Institute of Technology, Pasadena). 7.
More specific device (including OS). ⢠Time of day â¦and other factors like the browser in use or what re-marketing list someone may belong to as a result of visiting ..... the conversion delay, the longer it takes for automation to react and the
F.2.2 [Theory of Computation]: Analysis of Algorithms and Prob- lem ComplexityâNonnumerical Algorithms ... search engine. Internet advertising and sponsored ...
the developer can do is to make a take%it%or leave%it offer to company A of $(*& ..... A non$participation assignment rule specifies a p-3 for each i - I. We are ...
program that matches bids to maximize the social surplus, and announces prices at ... Our interest is in a double-sided auction mechanism for multiple goods with ... information case is efficient, budget-balanced, ex post individual rational and ...
