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Auction design and auction outcomes

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  • Koutroumpis, Pantelis
  • Cave, Martin

Abstract

We study the impact of spectrum auction design on the prices paid by telecommunications operators for two decades across 85 countries. Our empirical strategy combines information about competition in the local market, the level of adoption and a wide range of socio-economic indicators and process specific variables. 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 designs (SMRA with augmented switching and CCA with core pricing) result in auctions with systematically higher normalized returns. Further, we document that spectrum ownership appears to affect prices paid in subsequent auctions. 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.

Suggested Citation

  • Koutroumpis, Pantelis & Cave, Martin, 2018. "Auction design and auction outcomes," LSE Research Online Documents on Economics 88371, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:88371
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    File URL: https://eprints.lse.ac.uk/88371/
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    References listed on IDEAS

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    1. ,, 2011. "Manipulative auction design," Theoretical Economics, Econometric Society, vol. 6(2), May.
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    Cited by:

    1. Henriques, David, 2023. "A combinatorial auction to sell TV broadcasting rights in league sports," Telecommunications Policy, Elsevier, vol. 47(6).
    2. Howell, Bronwyn & Tang, Xin, 2023. "Using spectrum allocations to address indigenous rights claims: The case of New Zealand," Telecommunications Policy, Elsevier, vol. 47(10).
    3. Bahia, Kalvin & Castells, Pau, 2022. "The impact of spectrum assignment policies on consumer welfare," Telecommunications Policy, Elsevier, vol. 46(1).
    4. Sridhar, V. & Prasad, Rohit, 2021. "Analysis of spectrum pricing for commercial mobile services: A cross country study," Telecommunications Policy, Elsevier, vol. 45(9).
    5. Édgar González López & Luz Mónica Herrera Zapata & Jorge Murgueitio Cabrera & Sandra Milena Ortiz Laverde, 2021. "Las TIC y la sociedad digital: doce años después de la ley. Tomo I, Las TIC y las telecomunicaciones y el derecho a la competencia," Books, Universidad Externado de Colombia, Facultad de Derecho, number 1314.
    6. Committee, Nobel Prize, 2020. "Improvements to auction theory and inventions of new auction formats," Nobel Prize in Economics documents 2020-2, Nobel Prize Committee.

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    More about this item

    Keywords

    Auction; Digital communications; Spectrum; Market power;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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