This paper develops one possible argument why auctioning licenses to op-erate in an aftermarket may lead to higher prices in the aftermarket comparedto a more random allocation mechanism. Key ingredients in the argumentare differences in firms' risk attitudes and the fact that future market...

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...