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Winning Play in Spectrum Auctions

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  • Jeremy Bulow
  • Jonathan Levin
  • Paul Milgrom

Abstract

We describe factors that make bidding in large spectrum auctions complex -- including exposure and budget problems, the role of timing within an ascending auction, and the possibilities for price forecasting -- and how economic and game-theoretic analysis can assist bidders in overcoming these problems. We illustrate with the case of the FCC's Advanced Wireless Service auction, in which a new entrant, SpectrumCo, faced all these problems yet managed to purchase nationwide coverage at a discount of roughly a third relative to the prices paid by its incumbent competitors in the same auction, saving more than a billion dollars.

Suggested Citation

  • Jeremy Bulow & Jonathan Levin & Paul Milgrom, 2009. "Winning Play in Spectrum Auctions," NBER Working Papers 14765, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:14765
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    References listed on IDEAS

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    1. 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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    6. 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.
    7. Paul Milgrom, 2007. "Package Auctions and Exchanges," Econometrica, Econometric Society, vol. 75(4), pages 935-965, July.
    8. Christopher Avery, 1998. "Strategic Jump Bidding in English Auctions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 65(2), pages 185-210.
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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