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Design of the 3G Spectrum Auctions in the UK and Germany: An Experimental Investigation

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  • Stefan Seifert
  • Karl‐Martin Ehrhart

Abstract

. This paper analyses the auction designs chosen for awarding 3G licences in the UK and Germany and compares them with respect to revenues and bidders' surplus using a laboratory experiment. In our study with a given number of bidders, the German design leads to higher revenues. However, bidder surplus in the German design is lower and bidders face a severe exposure problem. Because this might discourage participation, it will probably lead to less competitive bidding in real applications.

Suggested Citation

  • Stefan Seifert & Karl‐Martin Ehrhart, 2005. "Design of the 3G Spectrum Auctions in the UK and Germany: An Experimental Investigation," German Economic Review, Verein für Socialpolitik, vol. 6(2), pages 229-248, May.
    • Handle: RePEc:bla:germec:v:6:y:2005:i:2:p:229-248
    DOI: 10.1111/j.1465-6485.2005.00128.x
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    References listed on IDEAS

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    1. Martin Feldstein, 1999. "Tax Avoidance And The Deadweight Loss Of The Income Tax," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 674-680, November.
    2. 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.
    3. Abbink, Klaus & Irlenbusch, Bernd & Pezanis-Christou, Paul & Rockenbach, Bettina & Sadrieh, Abdolkarim & Selten, Reinhard, 2005. "An experimental test of design alternatives for the British 3G/UMTS auction," European Economic Review, Elsevier, vol. 49(2), pages 505-530, February.
    4. Ken Binmore & Paul Klemperer, 2002. "The Biggest Auction Ever: the Sale of the British 3G Telecom Licences," Economic Journal, Royal Economic Society, vol. 112(478), pages 74-96, March.
    5. 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.
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    Cited by:

    1. Estache, Antonio & Iimi, Atsushi, 2008. "Procurement efficiency for infrastructure development and financial needs reassessed," Policy Research Working Paper Series 4662, The World Bank.
    2. Martin Bichler & Pasha Shabalin & Jürgen Wolf, 2013. "Do core-selecting Combinatorial Clock Auctions always lead to high efficiency? An experimental analysis of spectrum auction designs," Experimental Economics, Springer;Economic Science Association, vol. 16(4), pages 511-545, December.
    3. Ioannis Petrakis & Georg Ziegler & Martin Bichler, 2013. "Ascending Combinatorial Auctions with Allocation Constraints: On Game Theoretical and Computational Properties of Generic Pricing Rules," Information Systems Research, INFORMS, vol. 24(3), pages 768-786, September.
    4. Matthias Sutter & Martin Kocher & Sabine Strauß, "undated". "Individuals and teams in UMTS-license auctions," Working Papers 2007-23, Faculty of Economics and Statistics, Universität Innsbruck.
    5. World Bank, 2009. "Macedonia - Moving to Faster and More Inclusive Growth A Country Economic Memorandum : Main Report and Annex," World Bank Publications - Reports 3067, The World Bank Group.

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