Measuring the Efficiency of an Fcc Spectrum Auction

59 Pages Posted: 12 Dec 2005 Last revised: 25 Dec 2013

See all articles by Patrick Bajari

Patrick Bajari

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

Jeremy T. Fox

University of Michigan

Date Written: October 2005

Abstract

FCC spectrum auctions sell licenses to provide mobile phone service in designated geographic territories. We propose a method to structurally estimate the deterministic component of bidder valuations and apply it to the 1995-1996 C-block auction. We base our estimation of bidder values on a pairwise stability condition, which implies that two bidders cannot exchange licenses in a way that increases total surplus. Pairwise stability holds in many theoretical models of simultaneous ascending auctions, including some models of intimidatory collusion and demand reduction. Pairwise stability is also approximately satisfied in data that we examine from economic experiments. The lack of post-auction resale also suggests pairwise stability. Using our estimates of deterministic valuations, we measure the allocative efficiency of the C-block outcome.

Suggested Citation

Bajari, Patrick and Fox, Jeremy T., Measuring the Efficiency of an Fcc Spectrum Auction (October 2005). NBER Working Paper No. w11671. Available at SSRN: https://ssrn.com/abstract=819832

Patrick Bajari (Contact Author)

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
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

Jeremy T. Fox

University of Michigan ( email )

611 Tappan St.
Ann Arbor, MI 48104
United States
734 330-2854 (Phone)

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