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The Effect of Incumbent Bidding in Set-Aside Auctions: An Analysis of Prices in the Closed and Open Segments of FCC Auction 35

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Abstract

This paper examines the impact of an incumbent carrier’s participation in two simultaneously conducted auctions: one set-aside for non-incumbents and one open to all carriers. This paper estimates the extent to which prices in the closed auction were inflated by the participation of incumbents. This paper also estimates what prices would have been in the open auction had incumbents been excluded from bidding in the closed. It is found that an incumbent’s participation in the closed auction through a front, Alaska Native, enabled it to win more licenses at lower prices in FCC Auction 35. In contrast, non-incumbents won fewer licenses and paid more for what they won. The econometric techniques employed here to estimate prices in a “but for” world could be replicated in future damage analysis. Finally, this paper suggests an alternative method of screening bidders seeking access to set-aside auctions that would be consistent with the FCC’s goal of promoting competition in the wireless industry.

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File URL: http://www.cramton.umd.edu/papers2005-2009/cramton-ingraham-singer-incumbent-bidding-in-set-aside-auctions.pdf
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Bibliographic Info

Paper provided by University of Maryland, Department of Economics - Peter Cramton in its series Papers of Peter Cramton with number 08ibsaa.

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Length: 17 pages
Date of creation: 2008
Date of revision: 2008
Publication status: Published in Telecommunications Policy, 32, 273-290, 2008
Handle: RePEc:pcc:pccumd:08ibsaa

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Postal: Economics Department, University of Maryland, College Park, MD 20742-7211
Phone: (202) 318-0520
Fax: (202) 318-0520
Web page: http://www.cramton.umd.edu

Related research

Keywords: Auctions; spectrum auctions; market design;

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References

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  1. Peter Cramton, 1997. "The FCC Spectrum Auctions: An Early Assessment," Papers of Peter Cramton 97jemsfcc, University of Maryland, Department of Economics - Peter Cramton, revised 12 Jul 1998.
  2. Werden, G.J. & G.J. & Froeb, L.M., 1995. "Simulation as an Alternative to Structural Merger Policy in Differentiated Products Industries," Papers 95-02, U.S. Department of Justice - Antitrust Division.
  3. Paul Milgrom & Robert J. Weber, 1981. "A Theory of Auctions and Competitive Bidding," Discussion Papers 447R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. Bajari, Patrick & Fox, Jeremy, 2005. "Complementarities and Collusion in an FCC Spectrum Auction," Working paper 293, Regulation2point0.
  5. Bresnahan, Timothy F. & Salop, Steven C., 1986. "Quantifying the competitive effects of production joint ventures," International Journal of Industrial Organization, Elsevier, vol. 4(2), pages 155-175, June.
  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. Reynolds, Robert J. & Snapp, Bruce R., 1986. "The competitive effects of partial equity interests and joint ventures," International Journal of Industrial Organization, Elsevier, vol. 4(2), pages 141-153, June.
  8. repec:reg:rpubli:293 is not listed on IDEAS
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Cited by:
  1. Bajari, Patrick & Yeo, Jungwon, 2009. "Auction design and tacit collusion in FCC spectrum auctions," Information Economics and Policy, Elsevier, vol. 21(2), pages 90-100, June.

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