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Measuring the Efficiency of an FCC Spectrum Auction

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  • Jeremy T. Fox
  • Patrick Bajari

Abstract

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)

Suggested Citation

  • 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:aea:aejmic:v:5:y:2013:i:1:p:100-146
    Note: DOI: 10.1257/mic.5.1.100
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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • H82 - Public Economics - - Miscellaneous Issues - - - Governmental Property
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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