Where markets are insufficiently competitive, governments can intervene by auctioninglicenses to operate or by forcing divestitures. The Dutch government has doneexactly that, organizing auctions to redistribute tenancy rights for highway gasolinestations and forcing the divestiture of outlets...

This paper develops an economic argument relating auctions to high marketprices. At the core of the argument is the claim that market competition andbidding in an auction should be analyzed as part of one game, where the pricingstrategies in the market subgame depend on the bidding strategies...