4 results
4 - Measuring the Efficiency of an FCC Spectrum Auction
- from Part I - The Simultaneous Multiple-Round Auction
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- By Jeremy T. Fox, Department of Economics, Rice University, Patrick Bajari, Department of Economics, University of Washington
- Edited by Martin Bichler, Technische Universität München, Jacob K. Goeree, University of New South Wales, Sydney
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- Book:
- Handbook of Spectrum Auction Design
- Published online:
- 26 October 2017
- Print publication:
- 26 October 2017, pp 62-108
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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.
1 - Game Theory and Econometrics: A Survey of Some Recent Research
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- By Patrick Bajari, University of Washington, Han Hong, Stanford University, Denis Nekipelov, University of California-Berkeley
- Edited by Daron Acemoglu, Massachusetts Institute of Technology, Manuel Arellano, Eddie Dekel
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- Book:
- Advances in Economics and Econometrics
- Published online:
- 05 May 2013
- Print publication:
- 13 May 2013, pp 3-52
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Summary
Introduction
In this chapter, we survey an emerging literature at the intersection of industrial organization (IO), game theory, and econometrics. In theoretical IO models, game theory is by far the most common tool used to model industries. In such models, a researcher specifies a set of players and their strategies, information, and payoffs. Based on these choices, the researcher can use equilibrium concepts to derive positive and normative economic predictions. The application of game theory to IO has spawned a large and influential theoretical literature (see Tirole [1988] for a survey). Game theory can be used to model a broad set of economic problems; however, this flexibility sometimes has proved problematic for researchers. The predictions of game-theoretic models often delicately depend on the specification of the game. Researchers may not be able to agree, a priori, on which specification is most reasonable, and theory often provides little guidance on how to choose among multiple equilibria generated by a particular game.
The literature that we survey attempts to address these problems by letting the data tell us the payoffs that best explain observed behavior. In the literature that we survey, the econometrician is assumed to observe data from plays of a game and exogenous covariates that influence payoffs or constraints faced by the agent. The payoffs are specified as a parametric or nonparametric function of the actions of other agents and exogenous covariates. The estimators that we discuss “reverse-engineer” payoffs to explain the observed behavior.
15 - Economic insights from Internet auctions
- from Part V - How e-markets perform
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- By Patrick Bajari, Duke University, Ali Hortaçsu, University of Chicago
- Edited by Eric Brousseau, Université de Paris X, Nicolas Curien
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- Book:
- Internet and Digital Economics
- Published online:
- 22 September 2009
- Print publication:
- 28 June 2007, pp 425-459
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Summary
Introduction
Electronic commerce continues to grow at an impressive pace despite widely publicized failures by prominent online retailers. According to the Department of Commerce, total retail e-commerce in the United States in 2002 exceeded $45 billion, a 27 percent increase over the previous year. Online auctions are one of the most successful forms of electronic commerce. In 2002, more than 632 million items were listed for sale on the web behemoth eBay alone, a 51 percent increase over the previous year. This generated gross merchandise sales of more than $15 billion.
The rapid development of these markets is usually attributed to three factors. The first is that online auctions provide a less costly way for buyers and sellers on locally thin markets, such as specialized collectibles, to meet. Cohen (2002, p. 45) states, “It would be an exaggeration to say that eBay was built on Beanie Babies, but not by much.” In May 1997, nearly $500,000 worth of Beanie Babies was sold on eBay, totaling 6.6 percent of overall sales. While it may be difficult to find a particular Beanie Baby locally, such as Splash the Whale or Chocolate the Moose, you have a good chance of finding it online. Collectibles such as Beanie Babies, first edition books, Golden Age comics, and Elvis paraphernalia are among the thousands of categories actively traded in online auctions.
A second factor is that online auction sites substitute for more traditional market intermediaries such as specialty dealers in antiques, sports cards, and other collectibles.
5 - Incentives and award procedures: competitive tendering vs. negotiations in procurement
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- By Patrick Bajari, Professor of Economics University of Minnesota, USA, Steven Tadelis, Associate Professor of Economics University of California at Berkeley, USA
- Edited by Nicola Dimitri, Università degli Studi, Siena, Gustavo Piga, Università degli Studi di Roma 'Tor Vergata', Giancarlo Spagnolo, Stockholm School of Economics
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- Book:
- Handbook of Procurement
- Published online:
- 04 November 2009
- Print publication:
- 28 September 2006, pp 121-140
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Summary
Introduction
Manufactured goods, such as computers, TVs and automobiles are mass produced, have standardized characteristics and are typically purchased at list price. Other goods, such as new buildings, fighter jets, custom software or consulting services are tailored to fit a procurer's specific and often unique needs. To procure these customized goods, the procurer hires a contractor who supplies the goods according to a set of desired specifications. We call this the procurement problem.
The procurement problem has attracted much attention both in policy and in academic circles. The main focus of academic economists has been on procurement by the public sector, in part because of its sheer importance to the economy. For example, procurement by federal, state and local government accounts for more than 10 percent of Gross Domestic Product in the United States. Many private sector transactions are also governed by procurement contracts. Prominent examples include electronics components, custom software, automobile production and building construction.
When considering the procurement of goods and services, the procurer is faced with many challenges. First, she has to choose what exactly should be procured, and how to transmit her needs to the potential suppliers. Second, a contract must be laid out that includes contractual obligations and methods of compensation. Third, the procurer needs to decide how to award the procurement contract between the potential suppliers.
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