Open AccessThe German 4G Spectrum Auction: Design and Behaviour
Author(s) -
Cramton Peter,
Ockenfels Axel
Publication year - 2017
Publication title -
the economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.683
H-Index - 160
eISSN - 1468-0297
pISSN - 0013-0133
DOI - 10.1111/ecoj.12406
Subject(s) - revenue equivalence , bidding , spectrum auction , negotiation , vickrey–clarke–groves auction , generalized second price auction , microeconomics , auction theory , revenue , german , vickrey auction , reverse auction , economics , computer science , finance , political science , history , archaeology , law
The 2010 German 4G spectrum auction was an unusually large simultaneous ascending multi‐band auction. The bidding was competitive and the final assignment was efficient. However, our analysis suggests that independent and rational bidders had an opportunity to coordinate implicitly on a low‐revenue outcome. Coordination was difficult, though, because of a multiplicity of focal points. One important focal point involved post‐auction negotiations, posing risks to bidders and the auctioneer. We analyse different bidding scenarios and how post‐auction negotiations can affect values, bidding and efficiency. We also discuss how the simultaneous ascending auction format can be augmented to mitigate the risks.