Salant, David J., Cherbonnier, Frédéric and Van der Straeten, Karine (2026) Making Auctions for Transport Capacity to Roll. Journal of Economics and Management Strategy.

Abstract

Policymakers increasingly auction upstream inputs to promote downstream competition in network industries, including rail slots, airport slots, spectrum, and transmission rights. We study how selling capacity as a single package versus in sequential tranches affects entry when an incumbent holds an initial endowment. In a two-stage model with Cournot competition downstream, one-shot auctions allow unrestricted incumbents block entry, whereas sequential auctions may incentivize accommodation. Simulations calibrated to the Paris–Lyon route illustrate the sensitivity of entry to tranche design and demand.