Gaming in Combinatorial Clock Auctions

Tinbergen Institute Discussion Paper 13-027/VII

48 Pages Posted: 12 Feb 2013 Last revised: 17 Dec 2013

See all articles by Maarten Janssen

Maarten Janssen

University of Vienna - Faculty of Business, Economics, and Statistics

Vladimir A. Karamychev

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Date Written: December 10, 2013

Abstract

Combinatorial Clock Auctions (CCAs) have recently been used around the world to allocate spectrum for mobile telecom licenses. CCAs are claimed to significantly reduce the scope for gaming or strategic bidding. This paper shows, however, that CCAs facilitate strategic bidding. Real bidders in telecom markets are not only interested in the spectrum they win themselves and the price they pay for that, but also in raising rivals’ cost. CCAs provide bidders with excellent opportunities to do so. High auction prices in recent auctions in the Netherlands and Austria are probably to a large extent due to the CCA format. Bidding under a budget constraint is also a highly complicated gaming exercise in a CCA.

Keywords: combinatorial auctions, telecom markets, raising rivals' cost

JEL Classification: D440, L960

Suggested Citation

Janssen, Maarten C. W. and Karamychev, Vladimir A., Gaming in Combinatorial Clock Auctions (December 10, 2013). Tinbergen Institute Discussion Paper 13-027/VII, Available at SSRN: https://ssrn.com/abstract=2215812 or http://dx.doi.org/10.2139/ssrn.2215812

Maarten C. W. Janssen (Contact Author)

University of Vienna - Faculty of Business, Economics, and Statistics ( email )

Vienna, A-1210
Austria

Vladimir A. Karamychev

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

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