Working paper

Organizing Competition for the Market

Elisabetta Iossa, Patrick Rey, and Michael Waterson

Abstract

The paper studies competition for the market in a setting where incumbents (and, to a lesser extent, neighboring incumbents) benefi…t from a cost advantage. The paper fi…rst 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 fi…rms remain active, staggered tendering is preferable, as it maximizes the competitive pressure that comes from the other …firms.

Keywords

Dynamic procurement; incumbency advantage; local monopoly; competition; asymmetric auctions; synchronous contracts; staggered contracts;

JEL codes

  • D44: Auctions
  • D47: Market Design
  • H40: General
  • H57: Procurement
  • L43: Legal Monopolies and Regulation or Deregulation
  • L51: Economics of Regulation
  • R48: Government Pricing and Policy

Reference

Elisabetta Iossa, Patrick Rey, and Michael Waterson, Organizing Competition for the Market, TSE Working Paper, n. 19-984, January 2019.

See also

Published in

TSE Working Paper, n. 19-984, January 2019