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.

Iossa, E., Rey, P., Waterson, M. (2022). Organising Competition for the Market. JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION, 20(2), 822-868 [10.1093/jeea/jvab044].

Organising Competition for the Market

Iossa E.
;
2022-01-01

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.
2022
Pubblicato
Rilevanza internazionale
Articolo
Esperti anonimi
Settore SECS-P/01 - ECONOMIA POLITICA
English
Progetto PRIN
Iossa, E., Rey, P., Waterson, M. (2022). Organising Competition for the Market. JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION, 20(2), 822-868 [10.1093/jeea/jvab044].
Iossa, E; Rey, P; Waterson, M
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2108/317537
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