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The German 4G Spectrum Auction: Design and Behaviour

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  • Peter Cramton
  • Axel Ockenfels

Abstract

The 2010 German 4G spectrum auction was an unusually large simultaneous ascending multi‐band auction. The bidding was competitive and the final assignment was efficient. However, our analysis suggests that independent and rational bidders had an opportunity to coordinate implicitly on a low‐revenue outcome. Coordination was difficult, though, because of a multiplicity of focal points. One important focal point involved post‐auction negotiations, posing risks to bidders and the auctioneer. We analyse different bidding scenarios and how post‐auction negotiations can affect values, bidding and efficiency. We also discuss how the simultaneous ascending auction format can be augmented to mitigate the risks.

Suggested Citation

  • Peter Cramton & Axel Ockenfels, 2017. "The German 4G Spectrum Auction: Design and Behaviour," Economic Journal, Royal Economic Society, vol. 127(605), pages 305-324, October.
    • Handle: RePEc:wly:econjl:v:127:y:2017:i:605:p:f305-f324
    DOI: 10.1111/ecoj.12406
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    Cited by:

    1. Ignacio Palacios-Huerta & David C. Parkes & Richard Steinberg, 2024. "Combinatorial Auctions in Practice," Journal of Economic Literature, American Economic Association, vol. 62(2), pages 517-553, June.
    2. Kuś, Agnieszka, 2020. "Polish experience from first-ever spectrum auction," Telecommunications Policy, Elsevier, vol. 44(7).
    3. Yan Chen & Peter Cramton & John A. List & Axel Ockenfels, 2021. "Market Design, Human Behavior, and Management," Management Science, INFORMS, vol. 67(9), pages 5317-5348, September.
    4. Blumrosen, Liad & Solan, Eilon, 2023. "Selling spectrum in the presence of shared networks: The case of the Israeli 5G auction," Telecommunications Policy, Elsevier, vol. 47(2).
    5. Chloé Le Coq & Sebastian Schwenen, 2020. "Financial contracts as coordination device," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(2), pages 241-259, April.
    6. Thomas Dimpfl & Alexander Reining, 2021. "Price Discovery and Learning during the German 5G Auction," JRFM, MDPI, vol. 14(6), pages 1-17, June.
    7. Estrella Alonso & Joaquín Sánchez-Soriano & Juan Tejada, 2020. "Mixed Mechanisms for Auctioning Ranked Items," Mathematics, MDPI, vol. 8(12), pages 1-26, December.

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