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Measuring the Efficiency of an FCC Spectrum Auction

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  • Patrick Bajari
  • Jeremy T. Fox

Abstract

FCC spectrum auctions sell licenses to provide mobile phone service in designated geographic territories. We propose a method to structurally estimate the deterministic component of bidder valuations and apply it to the 1995–1996 C-block auction. We base our estimation of bidder values on a pairwise stability condition, which implies that two bidders cannot exchange licenses in a way that increases total surplus. Pairwise stability holds in many theoretical models of simultaneous ascending auctions, including some models of intimidatory collusion and demand reduction. Pairwise stability is also approximately satisfied in data that we examine from economic experiments. The lack of post-auction resale also suggests pairwise stability. Using our estimates of deterministic valuations, we measure the allocative efficiency of the C-block outcome.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11671.

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Date of creation: Oct 2005
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Publication status: published as Jeremy T. Fox & Patrick Bajari, 2013. "Measuring the Efficiency of an FCC Spectrum Auction," American Economic Journal: Microeconomics, American Economic Association, vol. 5(1), pages 100-146, February.
Handle: RePEc:nbr:nberwo:11671

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Cited by:
  1. Alistair Wilson & Mariagiovanna Baccara & Ayse Imrohoroglu & Leeat Yariv, 2009. "A Field Study on Matching with Network Externalities," Working Papers, University of Pittsburgh, Department of Economics 486, University of Pittsburgh, Department of Economics, revised Sep 2011.
  2. Jeremy T. Fox, 2008. "Estimating Matching Games with Transfers," NBER Working Papers 14382, National Bureau of Economic Research, Inc.
  3. Bajari, Patrick & Yeo, Jungwon, 2009. "Auction design and tacit collusion in FCC spectrum auctions," Information Economics and Policy, Elsevier, Elsevier, vol. 21(2), pages 90-100, June.
  4. Cramton, Peter & Ingraham, Allan T. & Singer, Hal J., 0. "The effect of incumbent bidding in set-aside auctions: An analysis of prices in the closed and open segments of FCC Auction 35," Telecommunications Policy, Elsevier, Elsevier, vol. 32(3-4), pages 273-290, April.
  5. Patrick Bajari & Jungwon Yeo, 2008. "Auction Design and Tacit Collusion in FCC Spectrum Auctions," NBER Working Papers 14441, National Bureau of Economic Research, Inc.

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