Micro-Theoretical Analysis on Market Competition and Auctions

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This research considers license auctions whose outcome directly affects market structure, and analyzes a mechanism that maximizes social welfare. As a main result, I show that optimal entry is implemented through a handicap auction in which the newcomer's payment is discounted by a pre-determined fraction (if it wins). Moreover, the actual size of optimal handicap is calculated under different situations, and the robustness of these results are investigated.