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Spectrum Auctions: How They Should and How They Should Not Be Shaped

Author

Listed:
  • Friedel Bolle
  • Yves Breitmoser

Abstract

Spectrum auctions are multiple-unit auctions where the objects auctioned are not necessarily identical. It is shown that the requirement of independent bids in such auction can prevent the existence of pure strategy equilibria (which implies inefficiency). Thus, we suggest that spectrum auctions should allow combinatorial bids. Additionally, all the auctions mentioned were multiple-round auctions - those are shown to offer an invitation to collude. A Folk Theorem as in repeated games can be proven. Preferable to a multiple-rounds scheme is a Vickrey auction, or, at least, the multiple-rounds scheme should (with a certain probability) be supplemented with a publicly announced last round. The paper is also (briefly) concerned with some other problems as a simultaneous vs. sequential procedure, the Winners' Curse, entry into the auctions, and the consideration of consumers' interests in the resulting (e.g. mobile phone) market.

Suggested Citation

  • Friedel Bolle & Yves Breitmoser, 2001. "Spectrum Auctions: How They Should and How They Should Not Be Shaped," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 58(3), pages 260-260, July.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200207)58:3_260:sahtsa_2.0.tx_2-9
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    Citations

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    Cited by:

    1. Abbink, Klaus & Irlenbusch, Bernd & Pezanis-Christou, Paul & Rockenbach, Bettina & Sadrieh, Abdolkarim & Selten, Reinhard, 2005. "An experimental test of design alternatives for the British 3G/UMTS auction," European Economic Review, Elsevier, vol. 49(2), pages 505-530, February.
    2. Bolle, Friedel, 2008. "Allocation decisions in network industries," Energy Economics, Elsevier, vol. 30(1), pages 97-112, January.

    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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