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Low price equilibrium in multi-unit auctions: the GSM spectrum auction in Germany

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  • Grimm, Veronika
  • Riedel, Frank
  • Wolfstetter, Elmar

Abstract

The second-generation GSM spectrum auction in Germany is probably the most clear cut example of a low price outcome in a simultaneous ascending-bid auction.The present paper gives an account of the events, describes the auction rules and market conditions, and provides a theoretical explanation of low price equilibria in simultaneous, ascending-bid auctions.In particular it is shown that the low price equilibrium that implements the efficient allocation is the unique perfect equilibrium of that game.
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Suggested Citation

  • Grimm, Veronika & Riedel, Frank & Wolfstetter, Elmar, 2003. "Low price equilibrium in multi-unit auctions: the GSM spectrum auction in Germany," International Journal of Industrial Organization, Elsevier, vol. 21(10), pages 1557-1569, December.
    • Handle: RePEc:eee:indorg:v:21:y:2003:i:10:p:1557-1569
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    References listed on IDEAS

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    1. Menezes, Flavio M., 1996. "Multiple-unit English auctions," European Journal of Political Economy, Elsevier, vol. 12(4), pages 671-684, December.
    2. Cramton, Peter & Schwartz, Jesse A, 2000. "Collusive Bidding: Lessons from the FCC Spectrum Auctions," Journal of Regulatory Economics, Springer, vol. 17(3), pages 229-252, May.
    3. Sandro Brusco & Giuseppe Lopomo, 2002. "Collusion via Signalling in Simultaneous Ascending Bid Auctions with Heterogeneous Objects, with and without Complementarities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(2), pages 407-436.
    4. Ulrich Kamecke, 1998. "Dominance or maximin: How to solve an English auction," International Journal of Game Theory, Springer;Game Theory Society, vol. 27(3), pages 407-426.
    5. Robert Wilson, 1979. "Auctions of Shares," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(4), pages 675-689.
    6. van Damme, Eric, 2002. "The European UMTS-auctions," European Economic Review, Elsevier, vol. 46(4-5), pages 846-858, May.
    7. Paul Milgrom, 2000. "Putting Auction Theory to Work: The Simultaneous Ascending Auction," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 245-272, April.
    8. R. Preston McAfee & John McMillan, 1996. "Analyzing the Airwaves Auction," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 159-175, Winter.
    9. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
    10. Grimm, Veronika & Riedel, Frank & Wolfstetter, Elmar, 2001. "The third generation (UMTS) spectrum auction in Germany," SFB 373 Discussion Papers 2001,70, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    11. Robert J. Weber, 1997. "Making More from Less: Strategic Demand Reduction in the FCC Spectrum Auctions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 529-548, September.
    12. Chatterjee, Kalyan & Samuelson, Larry, 1990. "Perfect Equilibria in Simultaneous-Offers Bargaining," International Journal of Game Theory, Springer;Game Theory Society, vol. 19(3), pages 237-267.
    13. Cramton, Peter, 1998. "Ascending auctions," European Economic Review, Elsevier, vol. 42(3-5), pages 745-756, May.
    14. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing

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