The design of an efficient private industry

Philippe Jehiel*, Benny Moldovanu

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


Government-sponsored auctions for production rights (e.g., license auctions, privatizations, etc.) shape the industry structure. Are there mechanisms that induce an efficient industry structure (at least when there are no positive costs to public funds)? The answer is no whenever firms have private information about both fixed and marginal costs. Our analysis also suggests that the second-best industry may either be more competitive or more monopolistic than the first-best one. These insights are in sharp contrast with the ones obtained for models where firms have one-dimensional private information, thus requiring more delicate policy recommendations.

Original languageEnglish
Pages (from-to)516-525
Number of pages10
JournalJournal of the European Economic Association
Issue number2-3
StatePublished - 2004
Externally publishedYes


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