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Auction design and tacit collusion in FCC spectrum auctions

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  • Bajari, Patrick
  • Yeo, Jungwon
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    Abstract

    The Federal Communications Commission (FCC) has used auctions to award spectrum since 1994. During this time period, the FCC has experimented with a variety of auctions rules including click box bidding and anonymous bidding. These rule changes make the actions of bidders less visible during the auction and also limit the set of bids that can be submitted during a particular round. Economic theory suggests that tacit collusion may be more difficult as a result. We examine this proposition using data from four auctions: the PCS-C Block, the PCS-C&F Block Reauction, the Advanced Wireless Service auction and the 700 MHz auction. We examine the frequency of jump bids, retaliatory bids and straightforward bids across these auctions. While this simple descriptive exercise has a number of limitations, the data suggest that these rule changes have limited firms' ability to tacitly collude.

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    Bibliographic Info

    Article provided by Elsevier in its journal Information Economics and Policy.

    Volume (Year): 21 (2009)
    Issue (Month): 2 (June)
    Pages: 90-100

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    Handle: RePEc:eee:iepoli:v:21:y:2009:i:2:p:90-100

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    Web page: http://www.elsevier.com/locate/inca/505549

    Related research

    Keywords: FCC spectrum auctions Simultaneous ascending auctions Collusion Auction design;

    References

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    1. Lawrence M. Ausubel & Peter Cramton & R. Preston McAfee & John McMillan, 1997. "Synergies in Wireless Telephony: Evidence from the Broadband PCS Auctions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 497-527, 09.
    2. Sandro Brusco & Giuseppe Lopomo, 2004. "Collusion via Signalling in Simultaneous Ascending Bid Auctions with Heterogeneous Objects, with and without Complementarities," Levine's Bibliography 122247000000000385, UCLA Department of Economics.
    3. 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.
    4. Peter Cramton & Jesse Schwartz, 2000. "Collusive Bidding: Lessons from the FCC Spectrum Auctions," Papers of Peter Cramton 00jre, University of Maryland, Department of Economics - Peter Cramton, revised 09 Mar 1999.
    5. Green, Edward J. & Porter, Robert H., 1982. "Noncooperative Collusion Under Imperfect Price Information," Working Papers 367, California Institute of Technology, Division of the Humanities and Social Sciences.
    6. Patrick Bajari & Jeremy T. Fox, 2005. "Measuring the Efficiency of an FCC Spectrum Auction," NBER Working Papers 11671, National Bureau of Economic Research, Inc.
    7. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721.
    8. Peter Cramton & Allan T. Ingraham & Hal J. Singer, 2008. "The Effect of Incumbent Bidding in Set-Aside Auctions: An Analysis of Prices in the Closed and Open Segments of FCC Auction 35," Papers of Peter Cramton 08ibsaa, University of Maryland, Department of Economics - Peter Cramton, revised 2008.
    9. Sandro Brusco & Giuseppe Lopomo & Leslie M. Marx, 2011. "The Economics of Contingent Re-auctions," American Economic Journal: Microeconomics, American Economic Association, vol. 3(2), pages 165-93, May.
    10. Cramton Peter & Schwartz Jesse A, 2002. "Collusive Bidding in the FCC Spectrum Auctions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 1(1), pages 1-20, December.
    11. Avery, Christopher, 1998. "Strategic Jump Bidding in English Auctions," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 185-210, April.
    12. Leslie Marx, 2006. "Economics at the Federal Communications Commission," Review of Industrial Organization, Springer, vol. 29(4), pages 349-368, December.
    13. 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, 09.
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    Cited by:
    1. Martin Bichler & Pasha Shabalin & J├╝rgen Wolf, 2013. "Do core-selecting Combinatorial Clock Auctions always lead to high efficiency? An experimental analysis of spectrum auction designs," Experimental Economics, Springer, vol. 16(4), pages 511-545, December.
    2. Helbing, Dirk & Balietti, Stefano, 2011. "Big data, privacy, and trusted web: What needs to be done," MPRA Paper 49702, University Library of Munich, Germany.

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