License Complementarity and Package Bidding: U.S. Spectrum Auctions
- American Economic Journal: Microeconomics (Forthcoming)
U.S. spectrum licenses cover geographically distinct areas and often complement each other. A bidder seeking to acquire multiple
licenses is exposed to risks of winning only isolated patches. Using
Auction 73 data, we model the bidding process as an entry game
with interdependent markets and evolving bidder belief. Bidders'
decisions on bidding provide bounds on licenses' stand-alone values
and complementarity between licenses. We show that the effects
of package bidding on bidders' exposure risks depend on package
format and size. More importantly, package bidding increases auction revenue substantially, at the cost of reducing bidder surplus
and increasing license allocation concentration.
Forthcoming Article Downloads