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Strange Bids: Bidding Behaviour in the United Kingdom's Third Generation Spectrum Auction

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  • Dustmann, Christian
  • Börgers, Tilman

Abstract

This Paper studies bidding behaviour in the auction of radio spectrum for third generation mobile telephone services which took place in the United Kingdom in the spring of 2000. We show that several companies? bidding behaviour deviates strongly from theoretical predictions. In particular some companies? evaluation of the added advantage of having a large license rather than a small license seemed to change dramatically during the auction for no obvious reason. We conclude that it is less well understood than previously believed how spectrum auctions work, and whether they lead to an efficient allocation of spectrum.

Suggested Citation

  • Dustmann, Christian & Börgers, Tilman, 2001. "Strange Bids: Bidding Behaviour in the United Kingdom's Third Generation Spectrum Auction," CEPR Discussion Papers 3072, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3072
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    1. Heidrun C. Hoppe & Philippe Jehiel & Benny Moldovanu, 2006. "License Auctions and Market Structure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 371-396, June.
    2. Paul Milgrom, 2000. "Putting Auction Theory to Work: The Simultaneous Ascending Auction," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 245-272, April.
    3. Peter Cramton, 2002. "Spectrum Auctions," Papers of Peter Cramton 01hte, University of Maryland, Department of Economics - Peter Cramton, revised 16 Jul 2001.
    4. Demange, Gabrielle & Gale, David & Sotomayor, Marilda, 1986. "Multi-Item Auctions," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 863-872, August.
    5. Peter Cramton, 1997. "The FCC Spectrum Auctions: An Early Assessment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 431-495, September.
    6. Lawrence M. Ausubel & Peter Cramton & R. Preston McAfee & John McMillan, 1997. "Synergies in Wireless Telephony: Evidence from the Broadband PCS Auctions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 497-527, September.
    7. Grimm, Veronika & Riedel, Frank & Wolfstetter, Elmar, 2001. "The third generation (UMTS) spectrum auction in Germany," SFB 373 Discussion Papers 2001,70, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    8. repec:bla:jemstr:v:4:y:1995:i:2:p:267-343:a is not listed on IDEAS
    9. Ken Binmore & Paul Klemperer, 2002. "The Biggest Auction Ever: the Sale of the British 3G Telecom Licences," Economic Journal, Royal Economic Society, vol. 112(478), pages C74-C96, March.
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    Keywords

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    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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