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

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Author Info
Börgers, Tilman
Dustmann, Christian

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

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Find related papers by JEL classification:
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401.
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  2. V. Grimm & F. Riedel & E. Wolfstetter, . "The Third Generation (UMTS) Spectrum Auction in Germany," Sonderforschungsbereich 373 2001-70, Humboldt Universitaet Berlin.
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  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. [Downloadable!] (restricted)
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  4. McMillan, John, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-62, Summer. [Downloadable!] (restricted)
  5. Peter Cramton, 2002. "Spectrum Auctions," Papers of Peter Cramton 01hte, University of Maryland, Department of Economics - Peter Cramton, revised 16 Jul 2001. [Downloadable!]
  6. Plott, Charles R. & Salmon, Timothy C., 2004. "The simultaneous, ascending auction: dynamics of price adjustment in experiments and in the UK3G spectrum auction," Journal of Economic Behavior & Organization, Elsevier, vol. 53(3), pages 353-383, March. [Downloadable!] (restricted)
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  7. Hakenes, Hendrik & Schnabel, Isabel, 2000. "License Auctions and Market Structure," Sonderforschungsbereich 504 Publications 01-21, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim. [Downloadable!]
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  8. Emiel Maasland & Sander Onderstal, 2003. "Auctions with Financial Externalities," Working Papers 2003.30, Fondazione Eni Enrico Mattei. [Downloadable!]
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  9. Professor Paul Klemperer, 2000. "What Really Matters in Auction Design," Microeconomics 0004008, EconWPA. [Downloadable!]
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  10. Peter Cramton & Jesse Schwartz, 2000. "Collusive Bidding in the FCC Spectrum Auctions," Econometric Society World Congress 2000 Contributed Papers 1210, Econometric Society. [Downloadable!]
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  11. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June. [Downloadable!] (restricted)
  12. Peter Cramton, 1997. "The FCC Spectrum Auctions: An Early Assessment," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 6(3), pages 431-495, 09. [Downloadable!] (restricted)
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  13. 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, Blackwell Publishing, vol. 6(3), pages 497-527, 09. [Downloadable!] (restricted)
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  14. Cramton, Peter & Schwartz, Jesse A, 2000. "Collusive Bidding: Lessons from the FCC Spectrum Auctions," Journal of Regulatory Economics, Springer, vol. 17(3), pages 229-52, May. [Downloadable!] (restricted)
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  15. Cramton, Peter C, 1995. "Money Out of Thin Air: The Nationwide Narrowband PCS Auction," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 4(2), pages 267-343, Summer.
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  16. 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. [Downloadable!] (restricted)
  17. 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. [Downloadable!] (restricted)
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  18. 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. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. 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. [Downloadable!] (restricted)
    Other versions:
  2. R. Mark Isaac & Timothy C. Salmon & Arthur Zillante, 2004. "A Theory of Jump Bidding in Ascending Auctions," Game Theory and Information 0404002, EconWPA. [Downloadable!]
    Other versions:
  3. Maasland, E. & Onderstal, S., 2002. "Auctions with financial externalities," Discussion Paper 22, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  4. Florian Englmaier & Pablo Guillen & Loreto Llorente & Sander Onderstal & Rupert Sausgruber, 2006. "The Chopstick Auction: A Study of the Exposure Problem in Multi-Unit Auctions," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  5. Klemperer, Paul, 2002. "How (Not) to Run Auctions: The European 3G Telecom Auctions," CEPR Discussion Papers 3215, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  6. Ricardo Gonçalves, 2008. "A communication equilibrium in English auctions with discrete bidding," Documentos de Trabalho em Economia (Working Papers in Economics) 04, Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto). [Downloadable!]
  7. Matthias Sutter & Martin Kocher & Sabine Strauß, . "Individuals and teams in UMTS-license auctions," Working Papers 2007-23, Faculty of Economics and Statistics, University of Innsbruck. [Downloadable!]
  8. Maasland, E. & Onderstal, S., 2002. "Optimal auctions with financial externalities," Discussion Paper 21, Tilburg University, Center for Economic Research. [Downloadable!]
  9. Veronika Grimm & Frank Riedel & Elmar Wolfstetter, 2001. "The Third Generation (UMTS) Spectrum Auction in Germany," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
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