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Winning Play in Spectrum Auctions

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Author Info

  • Jeremy Bulow

    ()
    (Gradudate School of Business, Stanford University)

  • Jonathan Levin

    ()
    (Stanford University)

  • Paul Milgrom

    ()
    (Stanford University)

Abstract

We describe factors that make bidding in large spectrum auctions complex including exposure and budget problems, the role of timing within an ascending auction, and the possibilities for price forecasting and how economic and game-theoretic analysis can assist bidders in overcoming these problems. As an example, we consider the case of the FCC's Advanced Wireless Service auction, in which a new entrant, SpectrumCo, faced all these problems yet managed to purchase nationwide coverage at a discount of roughly a third relative to the prices paid by its incumbent competitors in the same auction, saving more than a billion dollars.

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Bibliographic Info

Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 08-023.

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Date of creation: Feb 2009
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Handle: RePEc:sip:dpaper:08-023

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Related research

Keywords: Game Theory; Bidding; Exposure; Budget Problems; Price Forecasting;

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References

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  1. Paul Klemperer, 2000. "What Really Matters in Auction Design," Economics Series Working Papers 2000-W26, University of Oxford, Department of Economics.
  2. Brusco, Sandro & Lopomo, Giuseppe, 2002. "Collusion via Signalling in Simultaneous Ascending Bid Auctions with Heterogeneous Objects, with and without Complementarities," Review of Economic Studies, Wiley Blackwell, vol. 69(2), pages 407-36, April.
  3. Gul, Faruk & Stacchetti, Ennio, 2000. "The English Auction with Differentiated Commodities," Journal of Economic Theory, Elsevier, vol. 92(1), pages 66-95, May.
  4. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721, October.
  5. Avery, Christopher, 1998. "Strategic Jump Bidding in English Auctions," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 185-210, April.
  6. Zheng, Charles Z., 2012. "Jump bidding and overconcentration in decentralized simultaneous ascending auctions," Games and Economic Behavior, Elsevier, vol. 76(2), pages 648-664.
  7. Peter Cramton & Yoav Shoham & Richard Steinberg, 2004. "Combinatorial Auctions," Papers of Peter Cramton 04mit, University of Maryland, Department of Economics - Peter Cramton, revised 2004.
  8. Peter Cramton & Yoav Shoham & Richard Steinberg (ed.), 2006. "Combinatorial Auctions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262033429, December.
  9. Robert Day & Paul Milgrom, 2008. "Core-selecting package auctions," International Journal of Game Theory, Springer, vol. 36(3), pages 393-407, March.
  10. Robert Day & Peter Cramton, 2008. "Quadratic Core-Selecting Payment Rules for Combinatorial Auctions," Papers of Peter Cramton 08qcspr, University of Maryland, Department of Economics - Peter Cramton, revised 2012.
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Citations

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Cited by:
  1. Hu, Luke & Wolfstetter, Elmar G., 2012. "License auctions with exit (and entry) options: Alternative remedies for the exposure problem," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 394, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  2. Lavi, Ron & Oren, Sigal, 2012. "Side-communication yields efficiency of ascending auctions: The two-items case," Games and Economic Behavior, Elsevier, vol. 76(2), pages 439-456.

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