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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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    References listed on IDEAS

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    Cited by:

    1. repec:bla:jorssc:v:66:y:2017:i:5:p:997-1013 is not listed on IDEAS
    2. Patrick Bajari & Jungwon Yeo, 2008. "Auction Design and Tacit Collusion in FCC Spectrum Auctions," NBER Working Papers 14441, National Bureau of Economic Research, Inc.
    3. Goeree, Jacob K. & Lien, Yuanchuan, 2014. "An equilibrium analysis of the simultaneous ascending auction," Journal of Economic Theory, Elsevier, vol. 153(C), pages 506-533.
    4. 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.
    5. repec:pit:wpaper:486 is not listed on IDEAS
    6. Carneiro, Pedro & Lee, Sokbae & Wilhelm, Daniel, 2016. "Optimal Data Collection for Randomized Control Trials," IZA Discussion Papers 9908, Institute for the Study of Labor (IZA).
    7. Yoshihiko Kadoya, 2016. "What makes people anxious about life after the age of 65? Evidence from international survey research in Japan, the United States, China, and India," Review of Economics of the Household, Springer, pages 443-461.
    8. Pierre-André Chiappori & Bernard Salanié, 2016. "The Econometrics of Matching Models," Journal of Economic Literature, American Economic Association, pages 832-861.
    9. Peter Cramton & Allan T. Ingraham & Hal J. Singer, 2008. "The Effect of Incumbent Bidding in Set-Aside Auctions: An Analysis of Prices in the Closed and Open Segments of FCC Auction 35," Papers of Peter Cramton 08ibsaa, University of Maryland, Department of Economics - Peter Cramton, revised 2008.
    10. Arne Risa Hole & Hong Il Yoo, 2017. "The use of heuristic optimization algorithms to facilitate maximum simulated likelihood estimation of random parameter logit models," Journal of the Royal Statistical Society Series C, Royal Statistical Society, pages 997-1013.
    11. 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, pages 273-290.
    12. Jeremy T. Fox, 2008. "Estimating Matching Games with Transfers," NBER Working Papers 14382, National Bureau of Economic Research, Inc.
    13. repec:eee:indorg:v:52:y:2017:i:c:p:165-187 is not listed on IDEAS
    14. Hikmet Gunay & Xin Meng, 2012. "Exposure Problem in Multi-unit Auctions," ISER Discussion Paper 0848, Institute of Social and Economic Research, Osaka University.

    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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