Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2008-12-08 Revision-Date: 2011-08-02 Number: 08-117/1 Author-Name: Adriaan R. Soetevent Author-Email: email@example.com Author-Workplace-Name: Amsterdam School of Economics, University of Amsterdam Author-Name: Marco A. Haan Author-Email: firstname.lastname@example.org Author-Workplace-Name: University of Groningen Author-Name: Pim Heijnen Author-Email: email@example.com Author-Workplace-Name: Amsterdam School of Economics, University of Amsterdam Title: Do Auctions and Forced Divestitures increase Competition? Abstract: This discussion paper resulted in an article in the 'Journal of Industrial Economics' (2014). Volume 62, issue 3, pages 467-502.
To foster competition, governments can intervene by auctioning licenses to operate, or by imposing divestitures. The Dutch government has done exactly that, organizing auctions to redistribute tenancy rights for highway gasoline stations and imposing divestitures of such stations on the four major companies. We evaluate this policy experiment and find that the auctioning of licenses without an obligation to divest has no discernible effect on prices. An obligation to divest lowers prices by 1.3–2.3% at divested sites. Moreover, prices decrease by 0.9–1.2% at sites nearby. This suggests that the observed price decreases are at least partly due to competitive spillovers. Classification-JEL: D43, D44, L11 Keywords: Divestitures, Auctions, Entry, Policy Evaluation File-Url: http://papers.tinbergen.nl/08117.pdf File-Format: application/pdf File-Size: 777139 bytes Handle: RePEc:tin:wpaper:20080117