Auctions for Essential Inputs

79 Pages Posted: 27 Mar 2017 Last revised: 13 Jun 2017

See all articles by Patrick Rey

Patrick Rey

Toulouse School of Economics; Centre for Economic Policy Research (CEPR)

David J. Salant

Toulouse School of Economics; Columbia University - Columbia Institute for Tele Information; Center for Research in Wireless Communications

Date Written: May 25, 2017

Abstract

We study the design of auctions for the allocation of essential inputs, such as spectrum rights, transmission capacity or airport landing slots, to firms using these inputs to compete in a downstream market. When welfare matters in addition to auction revenues, there is a tradeoff: provisions aimed at fostering post-auction competition in the downstream market typically results in lower prices for consumers, but also in lower auction proceeds. We first characterize the optimal auction design from the standpoints of consumer and total welfare. We then examine how various regulatory instruments can be used to implement the desired allocation.

Keywords: Auctions, Market design, Essential inputs, Regulation, Antitrust

JEL Classification: D47, D43, D44, D61, L13, L43, L42, L51, D43

Suggested Citation

Rey, Patrick and Salant, David J., Auctions for Essential Inputs (May 25, 2017). Available at SSRN: https://ssrn.com/abstract=2941357 or http://dx.doi.org/10.2139/ssrn.2941357

Patrick Rey

Toulouse School of Economics ( email )

2 Rue du Doyen-Gabriel-Marty
Toulouse, 31042
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

David J. Salant (Contact Author)

Toulouse School of Economics ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

HOME PAGE: http://www.tse-fr.eu

Columbia University - Columbia Institute for Tele Information ( email )

3022 Broadway
New York, NY 10027
United States
+1-917-415-0451 (Phone)

Center for Research in Wireless Communications ( email )

101 Sikes Ave
Clemson, SC 29634

HOME PAGE: http://www.clemson.edu/crwc/people/faculty/Salant.htm

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