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Measuring the Efficiency of an FCC Spectrum Auction

  • Jeremy T. Fox
  • Patrick Bajari

We propose a method to structurally estimate the deterministic component of bidder valuations in FCC spectrum auctions, and apply it to the 1995-1996 C block auction. We base estimation on a pairwise stability condition: two bidders cannot exchange two licenses in a way that increases the sum of their valuations. Pairwise stability holds in some theoretical models of simultaneous ascending auctions under intimidatory collusion and demand reduction. Pairwise stability results in a matching game approach to estimation. We find that a system of four large regional licenses would raise the allocative efficiency of the C block outcome by 48 percent. (JEL D44, D45, H82, L82)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mic.5.1.100
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Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

Volume (Year): 5 (2013)
Issue (Month): 1 (February)
Pages: 100-146

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Handle: RePEc:aea:aejmic:v:5:y:2013:i:1:p:100-146
Note: DOI: 10.1257/mic.5.1.100
Contact details of provider: Web page: https://www.aeaweb.org/aej-micro
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  12. Milgrom, Paul, 1998. "Putting auction theory to work : the simultaneous ascending auction," Policy Research Working Paper Series 1986, The World Bank.
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  25. Moreton, Patrick S & Spiller, Pablo T, 1998. "What's in the Air: Interlicense Synergies in the Federal Communications Commission's Broadband Personal Communication Service Spectrum Auctions," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 677-716, October.
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