Book contents
- Frontmatter
- Contents
- List of Contributors
- Preface
- List of Papers
- Part I The Simultaneous Multiple-Round Auction
- 1 Putting Auction Theory to Work: The Simultaneous Ascending Auction
- 2 An Equilibrium Analysis of the Simultaneous Ascending Auction
- 3 The Efficiency of the FCC Spectrum Auctions
- 4 Measuring the Efficiency of an FCC Spectrum Auction
- Part II The Combinatorial Clock Auction Designs
- Part III Alternative Auction Designs
- Part IV Experimental Comparisons of Auction Designs
- Part V The Bidders’ Perspective
- Part VI Secondary Markets and Exchanges
- Outlook
- References
4 - Measuring the Efficiency of an FCC Spectrum Auction
from Part I - The Simultaneous Multiple-Round Auction
Published online by Cambridge University Press: 26 October 2017
Book contents
- Frontmatter
- Contents
- List of Contributors
- Preface
- List of Papers
- Part I The Simultaneous Multiple-Round Auction
- 1 Putting Auction Theory to Work: The Simultaneous Ascending Auction
- 2 An Equilibrium Analysis of the Simultaneous Ascending Auction
- 3 The Efficiency of the FCC Spectrum Auctions
- 4 Measuring the Efficiency of an FCC Spectrum Auction
- Part II The Combinatorial Clock Auction Designs
- Part III Alternative Auction Designs
- Part IV Experimental Comparisons of Auction Designs
- Part V The Bidders’ Perspective
- Part VI Secondary Markets and Exchanges
- Outlook
- References
Summary
Introduction
The US Federal Communications Commission (FCC) auctions licenses of radio spectrum for mobile phone service, employing an innovative simultaneous ascending auction. We study data from the 1995–1996 auction of licenses for the C Block of the 1900 MHz PCS spectrum band. The C block divided the continental United States into 480 small, geographically distinct licenses. A mobile phone carrier that holds two geographically adjacent licenses can offer mobile phone users a greater contiguous coverage area. One intent of auctioning small licenses is to allow bidders, rather the FCC, to decide where geographic complementarities lie. Bidders can assemble packages of licenses that maximize the benefits from geographic complementarities. The US practice of dividing the country into small geographic territories differs markedly from European practice, where nationwide licenses are often issued. These nationwide licenses ensure that the same provider will operate in all markets, so that all geographic complementarities are realized.
Economic theory suggests that the allocation of licenses in a simultaneous ascending auction need not be allocatively efficient. Brusco and Lopomo (2002) and Engelbrecht- Wiggans and Kahn (2005) demonstrate that bidders may implicitly collude through the threat of bidding wars. For example, a bidder might not add an additional license to a package to take advantage of complementarities because of threats of higher, retaliatory bids on the bidder's other licenses. For auctions of multiple homogeneous items, Ausubel and Cramton (2002) demonstrate that bidders may find it profitable to unilaterally reduce demand for licenses, similarly to a monopolist raising prices and profits by reducing supply. The concern about intimidatory collusion and demand reduction in FCC spectrum auctions is well founded. Cramton and Schwartz (2000, 2002) show that bidders in the AB block did not aggressively compete for licenses and in the later DEF block auction used the trailing digits of their bids to signal rivals not to bid on other licenses.
- Type
- Chapter
- Information
- Handbook of Spectrum Auction Design , pp. 62 - 108Publisher: Cambridge University PressPrint publication year: 2017
References
, , and , “The Determinants of Bank Mergers: A Revealed Preference Analysis,”
2012. University of Chicago working paper.
and , “Nonparametric Approaches to Auctions,”
Handbook of Econometrics, 2008, 6.
and , “Demand Reduction and Inefficiency in Multi-Unit Auctions,” July 2002. University of Maryland working paper.
and , , and , “Synergies in Wireless Telephony: Evidence from the Broadband PCS Auctions,”
Journal of Economics and Management Strategy, Fall 1997, 6 (3): 497–527.Google Scholar
, “Strategic Jump Bidding in English Auctions,”
Review of Economic Studies, 1998, 65, 185–210.Google Scholar
and , “Are structural estimates of auction models reasonable? Evidence from experimental data,”
Journal of Political Economy, 2005, 113 (4): 703–741.Google Scholar
, and , “Evaluating Wireless Carrier Consolidation Using Semiparametric Demand Estimation,”
Quantitative Marketing and Economics, 2008, 6 (4): 299–338.Google Scholar
,, , , and , “Theory, experiment and the federal communications commission spectrum auctions,”
Journal of EconomicBehavior and Organization, 2003, 51, 303–350.Google Scholar
and , “Collusion via Signalling in Simultaneous Ascending Bid Auctions with Heterogenous Objects, with and without Complementarities,”
Review of EconomicStudies, April 2002, 69 (2): 407–436.Google Scholar
, , and , “Winning Play in Spectrum Auctions,” February 2009. Stanford University working paper.
and , “Combination Bidding in Multiple Unit Auctions,”
2006. Université Libre de Bruxelles working paper.
, , and , “Bounding Best-Response Violations in Discriminatory Auctions with Private Values,”
American Economic Review, May 2007, 97 (2): 455–458.Google Scholar
, and , “Partner Choice and the Marital College Premium,”
2012. Columbia University working paper.
and , “Who Marries Whom and Why,”
The Journal of Political Economy, November 2006, 114 (1): 175–201.Google Scholar
, “The Federal Communications Commission,”
Journal of Law and Economics, 1959, 2, 1–40.Google Scholar
, “Simultaneous Asending Auctions,” in , , and , eds., Combinatorial Auctions, MIT Press, 2006.
, “Collusive Bidding: Lessons from the FCC Spectrum Auctions,”
Journalof Regulatory Economics, May 2000, 17 (3): 229–252.Google Scholar
, “Collusive Bidding in the FCC Spectrum Auctions,”
Contributions to Economic Analysis & Policy, 2002, 1 (1), Article 11.Google Scholar
, , and , Combinatorial Auctions, MIT Press, 2006.
and , “JobMatching with Heterogeneous Firms andWorkers,”
Econometrica, 1981, 49 (2): 437–450.Google Scholar
, “Aggregation in Matching Markets,”
International Economic Review, February 2000, 41 (1): 27–57.Google Scholar
and , “Core-Selecting Package Auctions,” International Journal of GameTheory, June 2007.
, , and , “Multi-Item Auctions,”
The Journal of Political Economy, August 1986, 94 (4): 863–872.Google Scholar
, , and , “Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords,”
AmericanEconomic Review, March 2007, 97 (1).Google Scholar
and , “Low revenue equilibria in simultaneous auctions,”
Management Science, 2005, 51 (3): 508–518.Google Scholar
, , and , “Econometrics of Share Auctions,” 2004. CREST working paper.
, “EstimatingMatching Games with Transfers,”
2010. University of Michigan working paper.
and , “Mobile Phone Mergers and Market Shares: Short Term Losses and Long Term Gains,” September 2006. NET Institute Working Paper 06-16.
, “Valuing New Goods in aModel with Complementarity: Online Newspapers,”
The American Economic Review, 2007, 97 (3): 713–744.Google Scholar
and , “Inferencewith an IncompleteModel of EnglishAuctions,”
Journalof Political Economy, February 2003, 111 (1): 1–51.Google Scholar
, “Non-parametric analysis of a generalized regression model,”
Journal of Econometrics, 1987, 35, 303–316.Google Scholar
and , “Matching with Contracts,”
American EconomicReview, September 2005, 95 (4): 913–935.Google Scholar
and , “Econometric models of asymmetric ascending auctions,”
Journalof Econometrics, 2003, 112, 327–358.Google Scholar
, “A SmoothedMaximum Score Estimator for the Binary ResponseModel,”
Econometrica, May 1992, 60 (3): 505–551.Google Scholar
and , “Mechanism Choice and Strategic Bidding in Divisible Good Auctions: An Empirical Analysis of the Turkish Treasury Auction Market,”
Journal of PoliticalEconomy, 2010, 118 (5): 833–865.Google Scholar
and , “Behavior in Multi-Unit Demand Auctions: Experiments with Uniform Price and Dynamic Vickrey Auctions,”
Econometrica, 2001, 69 (2): 413–454.Google Scholar
, “Discrete Bids and Empirical Inference in Divisible Good Auctions,”
Review of EconomicStudies, 2011, 78 (3): 974–1014.Google Scholar
and , “Job Matching, Coalition Formation, and Gross Substitutes,”
Econometrica, November 1982, 50 (6): 1483–1504.Google Scholar
and , “Assignment Problems and the Location of Economic Activities,”
Econometrica, January 1957, 25 (1): 53–76.Google Scholar
, “Identification and Estimation of Auction Models with Unobserved Heterogeneity,”
The Review of Economic Studies, 2011, 78 (3): 293–327.Google Scholar
and , “Collusion and Equilibrium Selection in Auctions,”
The Economic Journal, 2007, 117 (516): 120–145.Google Scholar
, “Elicitation of Honest Preferences for the Assignment of Individuals to Positions,”
Journal of Political Economy, June 1983, 91 (3): 461–479.Google Scholar
and , “Demand Reduction in Multiunit Auctions: Evidence from a Sportscard Field Experiment,”
American Economic Review, 2000, 90 (4): 961–972.Google Scholar
, “Maximum Score Estimation of the Stochastic Utility Model of Choice,”
Journalof Econometrics, 1975, 3 (3): 205–228.Google Scholar
, “Nonparametric identification and estimation of polychotomous choice models,”
Journal of Econometrics, 1993, 58, 137–168.Google Scholar
and , “Analyzing the Airwaves Auction,”
Journal of EconomicPerspectives, Winter 1996, 10 (1): 159–175.Google Scholar
, “Putting Auction Theory to Work: The Simultaneous Ascending Auction,”
Journalof Political Economy, 2000, 108 (2): 245–272.Google Scholar
and , “A Theory of Auctions and Competitive Bidding,”
Econometrica, 1982, 50 (5): 1089–1122.Google Scholar
and , “What's In the Air: Interlicense Synergies in the Federal Communications Commission's Broadband Personal Communication Service Spectrum Auctions,”
Journal of Law and Economics, October 1998, 41 (2, Part 2), 677–725.Google Scholar
and , “Large Sample Estimation and Hypothesis Testing,” in “Handbook of Econometrics,” Vol. 4, Elsevier, 1994, pp. 2111–2245.
and , An Introduction to the Structural Econometrics of Auction Data, MIT Press, 2006.
and , “Large Sample Confidence Regions Based on Subsamples under Minimal Assumptions,”
The Annals of Statistics, December 1994, 22 (4): 2031–2050.Google Scholar
and , “The assignment game I: the core,”
International Journal ofGame Theory, 1972, 1, 111–130.Google Scholar
, “The Limiting Distribution of the Maximum Rank Correlation Estimation,”
Econometrica, January 1993, 61 (1): 123–137.Google Scholar
, “How Smart is SmartMoney? A Two-Sided Matching Model of Venture Capital,”
Journal of Finance, December 2007, LXII (6), 2725–2762.Google Scholar
and , “Differential Evolution –A Simple and Efficient Heuristic for Global Optimization over Continuous Spaces,”
Journal of Global Optimization, 1997, 115, 341–359.Google Scholar
, “Quantifying the Supply-Side Benefits from Forward Contracting in Wholesale Electricity Markets,”
Journal of Applied Econometrics, November 2007, 22, 1179–1209.Google Scholar