Auctions with Endogenous Valuations: The Snowball Effect Revisited
Posted: 5 Sep 1998
This paper looks at the determination of ownership of capacity when there are two ex-ante symmetric agents bidding for many units of capacity which are sold sequentially. It is shown that convexity of payoffs in the final stage of the game is sufficient to ensure monopolization of capacity, but that increasing returns to scale are not sufficient to ensure monopolization.
JEL Classification: C72, D43, D44, D45
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