* Tinbergen Institute.

This paper develops one possible argument why auctioning licenses to op-erate in an aftermarket may lead to higher prices in the aftermarket compared to a more random allocation mechanism. Key ingredients in the argument are di¤erences in \u85rms risk attitudes and the fact that future market prof-its are uncertain so that winning an auction is like winning a lottery ticket. If one license is auctioned, auctions select the \u85rm that is least risk averse. This is what we call the risk attitude e¤ect. Firms that are less risk averse tend to set higher prices (or higher quantities in case quantity is the decision variable) in the marketplace than an average \u85rm. When multiple licenses are auctioned, this conclusion gets strengthened when there is a di¤erenti-ated Bertrand oligopoly in the marketplace. In case of Cournot competition, a strategic e¤ect works against the risk attitude e¤ect so that under certain conditions the more risk averse \u85rms will be selected leading (again) to higher market prices