Publication
License auctions when winning bids are financed through debt
Haan, M. A. & Toolsema-Veldman, L., Jun-2011, In : Journal of Industrial Economics. 59, 2, p. 254-281 28 p.Research output: Contribution to journal › Article › Academic › peer-review

Documents
- License auctions when winning bids are financed through debt
Final publisher's version, 232 KB, PDF document
DOI
We study an auction where two licenses to operate on a new market are sold and winning bidders finance their bids on the debt market. Higher bids imply higher debts which affects product market competition. When debt induces firms to compete more aggressively, retail prices are lower than in a model without debt, as are auction revenues. When debt induces firms to compete less aggressively, retail prices are higher than in a model without debt, and the effect on auction revenues is ambiguous. Net firm profits are always higher than in a model without debt due to endogenous credit rationing.
Original language | English |
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Pages (from-to) | 254-281 |
Number of pages | 28 |
Journal | Journal of Industrial Economics |
Volume | 59 |
Issue number | 2 |
Publication status | Published - Jun-2011 |
- TELECOM LICENSES, EXTERNALITIES, OLIGOPOLY, DESIGN, RIGHTS
Keywords
ID: 1853345