Winning Play in Spectrum Auctions
Stanford University; National Bureau of Economic Research (NBER)
Stanford University - Department of Economics; Stanford Graduate School of Business; National Bureau of Economic Research (NBER)
Paul R. Milgrom
NBER Working Paper No. w14765
We describe factors that make bidding in large spectrum auctions complex -- including exposure and budget problems, the role of timing within an ascending auction, and the possibilities for price forecasting -- and how economic and game-theoretic analysis can assist bidders in overcoming these problems. We illustrate with the case of the FCC's Advanced Wireless Service auction, in which a new entrant, SpectrumCo, faced all these problems yet managed to purchase nationwide coverage at a discount of roughly a third relative to the prices paid by its incumbent competitors in the same auction, saving more than a billion dollars.
Number of Pages in PDF File: 41
Date posted: March 5, 2009