Innovation and Market Design
Published Date
Copyright 2008
ISBN 0-226-40071-9
DOI 10.1086/592423
Market design plays an essential role in promoting innovation. I examine emission allowance auctions, airport slot auctions, spectrum auctions, and electricity markets and demonstrate how the market design can encourage innovation. Improved pricing information is one source of innovation. Enhancing competition is another driver of innovation seen in all the applications. Market design fosters innovation in other ways as well by addressing other potential market failures.