Non-cooperative entry deterrence in license auctions: Dynamic versus sealed bid


Journal Article

We examine the impact of potential entry on incumbent bidding behavior in license auctions, in both dynamic and sealed bid formats. Unlike sealed bid auctions, dynamic auctions reveal information about the identities of potential winners and allow bidders to revise their bids. This helps incumbents to coordinate their entry deterrence efforts. If entry is sufficiently costly for each incumbent, only the dynamic auction has an equilibrium where entry is deterred for sure. Numerical calculations suggest that, regardless of how costly entry is for each incumbent, sealed bid auctions can generate a higher probability of entry as well as a more efficient allocation. © 2010 The Authors. Journal compilation © 2010 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics.

Full Text

Duke Authors

Cited Authors

  • Varma, GD; Lopomo, G

Published Date

  • June 1, 2010

Published In

Volume / Issue

  • 58 / 2

Start / End Page

  • 450 - 476

Electronic International Standard Serial Number (EISSN)

  • 1467-6451

International Standard Serial Number (ISSN)

  • 0022-1821

Digital Object Identifier (DOI)

  • 10.1111/j.1467-6451.2010.00415.x

Citation Source

  • Scopus