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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

Author

Listed:
  • Cramton, Peter
  • Ingraham, Allan T.
  • Singer, Hal J.

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.

Suggested Citation

  • 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, vol. 32(3-4), pages 273-290, April.
    • Handle: RePEc:eee:telpol:v:32:y::i:3-4:p:273-290
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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.
    2. Howell, Bronwyn & Tang, Xin, 2023. "Using spectrum allocations to address indigenous rights claims: The case of New Zealand," Telecommunications Policy, Elsevier, vol. 47(10).
    3. Howell, Bronwyn E. & Potgieter, Petrus H., 2025. "Using spectrum set-asides to address distributional objectives: Lessons from Canada, New Zealand, South Africa and the United States," Telecommunications Policy, Elsevier, vol. 49(5).

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    Keywords

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    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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