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Strange Bids: Bidding Behaviour in the United Kingdom's Third Generation Spectrum Auction

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  • Börgers, Tilman
  • Dustmann, Christian

Abstract

This Paper studies bidding behaviour in the auction of radio spectrum for third generation mobile telephone services which took place in the United Kingdom in the spring of 2000. We show that several companies’ bidding behaviour deviates strongly from theoretical predictions. In particular some companies’ evaluation of the added advantage of having a large license rather than a small license seemed to change dramatically during the auction for no obvious reason. We conclude that it is less well understood than previously believed how spectrum auctions work, and whether they lead to an efficient allocation of spectrum.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3072.

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Date of creation: Nov 2001
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Handle: RePEc:cpr:ceprdp:3072

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Keywords: private value; simultaneous ascending auction; third generation spectrum auction;

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References

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  1. repec:wop:humbsf:2001-70 is not listed on IDEAS
  2. Heidrun C. Hoppe & Philippe Jehiel & Benny Moldovanu, 2006. "License Auctions and Market Structure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 371-396, 06.
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  4. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
  5. Binmore, Kenneth & Klemperer, Paul, 2002. "The Biggest Auction Ever: The Sale of the British 3G Telecom Licences," CEPR Discussion Papers 3214, C.E.P.R. Discussion Papers.
  6. Peter Cramton, 2002. "Spectrum Auctions," Papers of Peter Cramton 01hte, University of Maryland, Department of Economics - Peter Cramton, revised 16 Jul 2001.
  7. 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.
  8. Paul Milgrom, . "Putting Auction Theory to Work: The Simultaneous Ascending Auction," Working Papers 98002, Stanford University, Department of Economics.
  9. Demange, Gabrielle & Gale, David & Sotomayor, Marilda, 1986. "Multi-Item Auctions," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 863-72, August.
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  11. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, December.
  12. Lawrence M. Ausubel & Peter Cramton & R. Preston McAfee & John McMillan, 1998. "Synergies in Wireless Telephony: Evidence from the Broadband PCS Auctions," Papers of Peter Cramton 97jems, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
  13. Emiel Maasland & Sander Onderstal, 2003. "Auctions with Financial Externalities," Working Papers 2003.30, Fondazione Eni Enrico Mattei.
  14. 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.
  15. Grimm, Veronika & Riedel, Frank & Wolfstetter, Elmar, 2001. "The third generation (UMTS) spectrum auction in Germany," SFB 373 Discussion Papers 2001,70, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  16. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
  17. Klemperer, Paul, 1998. "Auctions with almost common values: The 'Wallet Game' and its applications," European Economic Review, Elsevier, vol. 42(3-5), pages 757-769, May.
  18. Plott, Charles R. & Salmon, Timothy, 2002. "The Simultaneous, Ascending Auction: Dynamics of Price Adjustment in Experiments and in the U.K. 3G Spectrum Auction," Working Papers 1155, California Institute of Technology, Division of the Humanities and Social Sciences.
  19. John McMillan, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-162, Summer.
  20. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
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