Awarding Monopoly Franchises

摘要: The authors analyze how to award a monopoly franchise when the objective is maximize expected consumers' surplus net of transfer payments producer. Potential producers initially possess independent private information about uncertain production costs. Only chosen producer subsequently observes realized After awarding with lowest costs, prices are optimally set above marginal cost. These ex post distortions foster more competitive bidding ante. for any bid-cost pair invariant number bidders, n, though and profits decline n. Copyright 1987 by American Economic Association.