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Organising competition for the market
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Iossa, Elisabetta, Reyand, Patrick and Waterson, Michael (2022) Organising competition for the market. Journal of the European Economic Association, 20 (2). pp. 822-868. doi:10.1093/jeea/jvab044 ISSN 1542-4766.
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Official URL: https://doi.org/10.1093/jeea/jvab044
Abstract
We study competition for the market in a setting where incumbents (and, to a lesser extent, neighbouring incumbents) benefit from a cost or information advantage. We first compare the outcome of staggered and synchronous tenders, before drawing the implications for market design. We find the timing of tenders interrelates with the likelihood of monopolisation. For high incumbency advantages and/or discount factors monopolisation is expected, in which case synchronous tendering is preferable as it strengthens the pressure that entrants exercise on the monopolist. For low incumbency advantages and/or discount factors other firms remain active, in which case staggered tendering is preferable as it maximises competitive pressure coming from the other firms. We use bus tendering in London to illustrate our insights and draw policy implications.
Item Type: | Journal Article | ||||||||||||
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Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management |
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Divisions: | Faculty of Social Sciences > Economics | ||||||||||||
Library of Congress Subject Headings (LCSH): | Competition, Competition, Imperfect, Letting of contracts, Industrial organization (Economic theory) | ||||||||||||
Journal or Publication Title: | Journal of the European Economic Association | ||||||||||||
Publisher: | Oxford University Press | ||||||||||||
ISSN: | 1542-4766 | ||||||||||||
Official Date: | April 2022 | ||||||||||||
Dates: |
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Volume: | 20 | ||||||||||||
Number: | 2 | ||||||||||||
Page Range: | pp. 822-868 | ||||||||||||
DOI: | 10.1093/jeea/jvab044 | ||||||||||||
Status: | Peer Reviewed | ||||||||||||
Publication Status: | Published | ||||||||||||
Reuse Statement (publisher, data, author rights): | This is a pre-copyedited, author-produced version of an article accepted for publication in Journal of the European Economic Association following peer review. The version of record Elisabetta Iossa, Patrick Rey, Michael Waterson, Organising Competition for the Market, Journal of the European Economic Association, 2021;, jvab044, is available online at: https://doi.org/10.1093/jeea/jvab044 | ||||||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||||||
Date of first compliant deposit: | 9 July 2021 | ||||||||||||
Date of first compliant Open Access: | 13 October 2022 | ||||||||||||
RIOXX Funder/Project Grant: |
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