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Should Governments Auction Nationwide Spectrum Licenses? Estimating Bidder Valuations

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Author Info
Patrick Bajari () (Duke University)
Jeremy T. Fox () (University of Chicago)

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Abstract

We empirically study bidding in the C Block of the US mobile phone spectrum auctions. Spectrum auctions are conducted using a simultaneous ascending auction design that allows bidders to assemble packages of licenses with geographic complementarities. While this auction design allows the market to find complementarities, the auction might also result in an inefficient equilibrium. In addition, these auctions have equilibria where implicit collusion is sustained through threats of bidding wars. We estimate a structural model in order to test for the presence of complementarities and implicit collusion. The estimation strategy is valid under a wide variety of alternative assumptions about equilibrium in these auctions and is robust to potentially important forms of unobserved heterogeneity. We make suggestions about the design of future spectrum auctions.

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Paper provided by NET Institute in its series Working Papers with number 04-15.

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Length: 49 pages
Date of creation: Sep 2004
Date of revision: Sep 2004
Handle: RePEc:net:wpaper:0415

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