The periodical re-auction of a water monopoly concession causes the danger of underinvestment. If the life-time of specific assets such as water pipes exceeds the contract length and transferring the ownership of assets is difficult, the incumbent franchisee faces a hold-up problem. Using a...

In this paper we investigate the relationship between auctions’ results and the number of bidders for local transportation contracts in London. Using an original database concerning 294 local transportation routes we find that a higher number of bidders is associated with a lower cost of...

Demsetz (1968) and Posner (1972) suggested competitive bidding as an alternative to natural monopoly regulation. Williamson (1976) and Goldberg (1976) argued that the problems of natural monopoly regulation are inherent in long-term investment under uncertainty. Long- and short-term franchising...

We analyze a model of repeated franchise bidding for natural monopoly with contestable licensing -- a franchisee holds an (exclusive) license to operate a franchise until another firm offers to pay more for it. In a world where quality is observable but not verifiable, the simple regulatory...

In this paper, we develop a franchise bidding mechanism for postal services under the Universal Service Obligation (USO) in rural areas. For the collection and delivery of mail on rural routes and for small town counter operations, monopoly franchises are awarded. Deficits caused by the USO are...

The efficiency of franchise bidding schemes for network industries has been challenged by many authors. One of the problems with this kind of schemes concerns the lack of investment?s incentives of the incumbent at the end of the contract. The goal of this article is twofold. First, we explain...

In order to improve the country's monopolistic environment, the Japanese government took several deregulation measures during the last decade. However, industrial monopolies remain regionally; some new mechanism has therefore become necessary to induce the regional monopoly firms improve the...