Auction Design and Auction Outcomes
28 Pages Posted: 27 Apr 2017
Date Written: April 26, 2017
We study the impact of auction design on the final prices paid by telecommunications operators for the past two decades across the world. Our empirical strategy combines information about competition in the local market, the level of adoption and a wide range of socio-economic indicators. Using a micro dataset of almost every mobile spectrum auction performed so far – both regional and national – we show that auction design affects final prices paid. Two combinations of lot pricing and package rules (SMRA with augmented switching and CCA with core pricing) result in auctions with systematically higher normalized returns. Further, the past history of spectrum awards appears to affect prices paid in subsequent auctions. Previous ownership of commercial lots is linked with higher prices paid per lot which varies across national and regional licences. We discuss the mechanisms of cost minimization and foreclosure faced by operators in different regulatory environments. Our findings have implications for policy-makers and regulators.
Keywords: Auction, Digital Communications, Spectrum, Market Power
JEL Classification: D44, C78, L96
Suggested Citation: Suggested Citation