Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/85429 
Year of Publication: 
2000
Series/Report no.: 
Tinbergen Institute Discussion Paper No. 00-046/1
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
On an increasing scale auctions are used to allocate the licenses tooperate on markets which are thought notsuited for free entry. According to standard economic arguments, thelicense fees paid at the auction will notaffect consumer prices since they constitute a sunk cost. Thisstandard view is not uncontested though. In thepresent paper we experimentally investigate two arguments for apotential upward effect of auctioning onprices: the incorporation of entry fees in prices due to the use ofmark-up pricing rules, and the tendency ofauctions to select the more collusive firms. Our results indicatethat auctioning increases the probability of highprices, and that this is mainly due to the use of mark-up pricingrules.
Document Type: 
Working Paper

Files in This Item:
File
Size
385.98 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.