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License Complementarity and Package Bidding: US Spectrum Auctions

Author

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  • Mo Xiao
  • Zhe Yuan

Abstract

US spectrum licenses cover geographically distinct areas and often complement each other. A bidder seeking to acquire multiple licenses is exposed to the risk of winning only isolated patches. Using Auction 73 data, we model the bidding process as an entry game with interdependent markets and evolving bidder beliefs. Bidders' decisions on bidding provide bounds on licenses' stand-alone values and complementarity between licenses. We show that the effects of package bidding on bidders' exposure risks depend on package format and size. More importantly, package bidding increases auction revenue substantially at the cost of reducing bidder surplus and increasing license allocation concentration.

Suggested Citation

  • Mo Xiao & Zhe Yuan, 2022. "License Complementarity and Package Bidding: US Spectrum Auctions," American Economic Journal: Microeconomics, American Economic Association, vol. 14(4), pages 420-464, November.
    • Handle: RePEc:aea:aejmic:v:14:y:2022:i:4:p:420-64
    DOI: 10.1257/mic.20210091
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    Cited by:

    1. Rosa, Benjamin V., 2022. "Bid credits in simultaneous ascending auctions," Games and Economic Behavior, Elsevier, vol. 132(C), pages 189-203.
    2. Sridhar, V. & Prasad, Rohit, 2021. "Analysis of spectrum pricing for commercial mobile services: A cross country study," Telecommunications Policy, Elsevier, vol. 45(9).

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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H82 - Public Economics - - Miscellaneous Issues - - - Governmental Property
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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