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Auction Design and Tacit Collusion in Fcc Spectrum Auctions

23 Pages Posted: 27 Oct 2008  

Patrick Bajari

University of Michigan at Ann Arbor - Economics; National Bureau of Economic Research (NBER)

Jungwon Yeo

University of Minnesota - Twin Cities

Date Written: October 2008

Abstract

The Federal Communications Commission (FCC) has used auctions to award spectrum since 1994. During this time period, the FCC has experimented with a variety of auctions rules including click box bidding and anonymous bidding. These rule changes make the actions of bidders less visible during the auction and also limit the set of bids which can be submitted by a bidder during a particular round. Economic theory suggests that tacit collusion may be more difficult as a result. We examine this proposition using data from 4 auctions: the PCS C Block, Auction 35, the Advanced Wireless Service auction and the 700 Mhz auction. We examine the frequency of jump bids, retaliatory bids and straightforward bids across these auctions. While this simple descriptive exercise has a number of limitations, the data suggests that these rule changes did limit firms' ability to tacitly collude.

Suggested Citation

Bajari, Patrick and Yeo, Jungwon, Auction Design and Tacit Collusion in Fcc Spectrum Auctions (October 2008). NBER Working Paper No. w14441. Available at SSRN: https://ssrn.com/abstract=1289675

Patrick Bajari (Contact Author)

University of Michigan at Ann Arbor - Economics ( email )

266 Lorch Hall
Ann Arbor, MI 48109
United States
734-763-5319 (Phone)

HOME PAGE: http://www-personal.umich.edu/~bajari/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jungwon Yeo

University of Minnesota - Twin Cities ( email )

Minneapolis, MN 55455
United States

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