IDEAS home Printed from https://ideas.repec.org/p/rsc/rsceui/2010-55.html
   My bibliography  Save this paper

An Econometric Analysis of 3G Auction Spectrum Valuations

Author

Listed:
  • Erik Bohlin
  • Gary Madden
  • Aaron Morey

Abstract

Scarce radio spectrum is assigned to mobile network operators (MNOs) by national regulatory authorities (NRAs). Spectrum is usually assigned by beauty contest or an auction. The process requires that winners make a payment to the government. MNOs seek scarce spectrum to enable the provision of wireless services for profit. While MNOs are imperfectly aware of their costs, NRAs rely solely on MNOs for this information. As such, NRAs set spectrum assignment conditions (including minimum bid price) largely ignorant of MNO operating conditions. This study examines the performance of 3G auction outcomes in terms of the prices paid by winners via an econometric analysis of a unique sample of national 3G spectrum auctions. These winning bids depend on national and mobile market conditions, spectrum package attributes, license process, and post-award operator requirements. Finally, model estimation accounts for the censored nature of these data.

Suggested Citation

  • Erik Bohlin & Gary Madden & Aaron Morey, 2010. "An Econometric Analysis of 3G Auction Spectrum Valuations," RSCAS Working Papers 2010/55, European University Institute.
    • Handle: RePEc:rsc:rsceui:2010/55
    as

    Download full text from publisher

    File URL: http://cadmus.eui.eu/dspace/bitstream/1814/14237/1/RSCAS_2010_55.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Faulhaber, Gerald R., 2006. "The future of wireless telecommunications: Spectrum as a critical resource," Information Economics and Policy, Elsevier, vol. 18(3), pages 256-271, September.
    2. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
    3. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    4. Tilman Börgers & Christian Dustmann, 2003. "Awarding telecom licences: the recent European experience [‘The German and Austrian UMTS Spectrum Auctions’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 18(36), pages 215-268.
    5. Gruber,Harald, 2005. "The Economics of Mobile Telecommunications," Cambridge Books, Cambridge University Press, number 9780521843270, January.
    6. Scanlan, Mark, 0. "Hiccups in US spectrum auctions," Telecommunications Policy, Elsevier, vol. 25(10-11), pages 689-701, October.
    7. Harald Gruber, 2002. "Endogenous Sunk Costs in the Market for Mobile Telecommunications - The Role of Licence Fees," The Economic and Social Review, Economic and Social Studies, vol. 33(1), pages 55-64.
    8. Gary Madden & Russel Cooper (ed.), 2009. "The Economics of Digital Markets," Books, Edward Elgar Publishing, number 13031.
    9. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    10. McMillan, John, 1995. "Why auction the spectrum?," Telecommunications Policy, Elsevier, vol. 19(3), pages 191-199, April.
    11. Hazlett, Thomas W, 1998. "Assigning Property Rights to Radio Spectrum Users: Why Did FCC License Auctions Take 67 Years?," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 529-575, October.
    12. John McMillan, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-162, Summer.
    13. Klemperer, Paul, 2002. "How (not) to run auctions: The European 3G telecom auctions," European Economic Review, Elsevier, vol. 46(4-5), pages 829-845, May.
    14. Noam, Eli, 1998. "Spectrum Auctions: Yesterday's Heresy, Today's Orthodoxy, Tomorrow's Anachronism. Taking the Next Step to Open Spectrum Access," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 765-790, October.
    15. Gruber, Harald, 2001. "Spectrum limits and competition in mobile markets: the role of licence fees," Telecommunications Policy, Elsevier, vol. 25(1-2), pages 59-70, February.
    16. McDonald, John F & Moffitt, Robert A, 1980. "The Uses of Tobit Analysis," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 318-321, May.
    17. Joshua S. Gans & Stephen P. King & Julian Wright, 2005. "Wireless Communications," Monash Economics Working Papers archive-45, Monash University, Department of Economics.
    18. Gandal, Neil & Salant, David & Waverman, Leonard, 0. "Standards in wireless telephone networks," Telecommunications Policy, Elsevier, vol. 27(5-6), pages 325-332, June.
    19. Burguet, Roberto & Sakovics, Jozsef, 1996. "Reserve Prices without Commitment," Games and Economic Behavior, Elsevier, vol. 15(2), pages 149-164, August.
    20. L. Cartelier, 2003. "Auctions Versus Beauty Contests: The Allocation of UMTS Licences in Europe," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 74(1), pages 63-85, March.
    21. Ballard, Charles L & Shoven, John B & Whalley, John, 1985. "General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States," American Economic Review, American Economic Association, vol. 75(1), pages 128-138, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zaber, Moinul & Sirbu, Marvin, 2012. "Impact of spectrum management policy on the penetration of 3G technology," Telecommunications Policy, Elsevier, vol. 36(9), pages 762-782.
    2. Massaro, Maria & Beltrán, Fernando, 2020. "Will 5G lead to more spectrum sharing? Discussing recent developments of the LSA and the CBRS spectrum sharing frameworks," Telecommunications Policy, Elsevier, vol. 44(7).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peter Cramton, 2002. "Spectrum Auctions," Papers of Peter Cramton 01hte, University of Maryland, Department of Economics - Peter Cramton, revised 16 Jul 2001.
    2. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
    3. Gary Madden & Aaron Morey & Erik Bohlin, 2012. "Regulator Incentives and Third Generation National Mobile Telecommunications Market Entry," Chapters, in: Gerald R. Faulhaber & Gary Madden & Jeffrey Petchey (ed.), Regulation and the Performance of Communication and Information Networks, chapter 11, Edward Elgar Publishing.
    4. Porter, David & Rassenti, Stephen & Shobe, William & Smith, Vernon & Winn, Abel, 2009. "The design, testing and implementation of Virginia's NOx allowance auction," Journal of Economic Behavior & Organization, Elsevier, vol. 69(2), pages 190-200, February.
    5. Committee, Nobel Prize, 2020. "Improvements to auction theory and inventions of new auction formats," Nobel Prize in Economics documents 2020-2, Nobel Prize Committee.
    6. Thomas W. Hazlett & David Porter & Vernon Smith, 2011. "Radio Spectrum and the Disruptive Clarity of Ronald Coase," Journal of Law and Economics, University of Chicago Press, vol. 54(S4), pages 125-165.
    7. van Damme, Eric, 2002. "The European UMTS-auctions," European Economic Review, Elsevier, vol. 46(4-5), pages 846-858, May.
    8. Lawrence White, 2000. ""Propertyzing" the Electromagnetic Spectrum: Why It's Important, and How to Begin," Working Papers 00-08, New York University, Leonard N. Stern School of Business, Department of Economics.
    9. Thomas W. Hazlett & Roberto E. Muñoz, 2009. "A welfare analysis of spectrum allocation policies," RAND Journal of Economics, RAND Corporation, vol. 40(3), pages 424-454, September.
    10. Gary Madden & Hiroaki Suenaga, 2017. "The determinants of price in 3G spectrum auctions," Applied Economics, Taylor & Francis Journals, vol. 49(32), pages 3129-3140, July.
    11. Nicolas Gruyer & Nathalie Lenoir, 2003. "Auctioning airport slots (?)," Post-Print hal-01021718, HAL.
    12. Christopher M. Anderson & Daniel S. Holland, 2006. "Auctions for Initial Sale of Annual Catch Entitlement," Land Economics, University of Wisconsin Press, vol. 82(3), pages 333-352.
    13. Azacis, Helmuts & Burguet, Roberto, 2008. "Incumbency and entry in license auctions: The Anglo-Dutch auction meets another simple alternative," International Journal of Industrial Organization, Elsevier, vol. 26(3), pages 730-745, May.
    14. Michelle Connolly & Nelson Sa & Azeem Zaman & Chris Roark & Akshaya Trivedi, 2018. "The Evolution of U.S. Spectrum Values Over Time," Working Papers 121, Brandeis University, Department of Economics and International Business School.
    15. Alexander Teytelboym & Shengwu Li & Scott Duke Kominers & Mohammad Akbarpour & Piotr Dworczak, 2021. "Discovering Auctions: Contributions of Paul Milgrom and Robert Wilson," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(3), pages 709-750, July.
    16. Dirk Engelmann & Veronika Grimm, 2009. "Bidding Behaviour in Multi-Unit Auctions - An Experimental Investigation," Economic Journal, Royal Economic Society, vol. 119(537), pages 855-882, April.
    17. Cramton, Peter C, 1995. "Money Out of Thin Air: The Nationwide Narrowband PCS Auction," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(2), pages 267-343, Summer.
    18. Moldovanu, Benny & Ewerhart II, Christian, 2001. "The German UMTS Design: Insights From Multi-Object Auction Theory," Sonderforschungsbereich 504 Publications 02-05, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    19. Marja Appelman & S. Onderstal & Joeri Gorter & Mark Lijesen & Richard Venniker, 2003. "Equal rules or equal opportunities? Demystifying level playing field," CPB Document 34, CPB Netherlands Bureau for Economic Policy Analysis.
    20. Choi, Yong-Jae, 2022. "Spectrum auctions in a thin market: The Korean case," Telecommunications Policy, Elsevier, vol. 46(8).

    More about this item

    Keywords

    Mobile telephone markets; spectrum allocation; spectrum bid price;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rsc:rsceui:2010/55. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: RSCAS web unit (email available below). General contact details of provider: https://edirc.repec.org/data/rsiueit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.