DP3072 Strange Bids: Bidding Behaviour in the United Kingdom's Third Generation Spectrum Auction

Author(s): Tilman Börgers, Christian Dustmann
Publication Date: November 2001
Keyword(s): private value, simultaneous ascending auction, third generation spectrum auction
JEL(s): D44
Programme Areas: Industrial Organization
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=3072

This Paper studies bidding behaviour in the auction of radio spectrum for third generation mobile telephone services which took place in the United Kingdom in the spring of 2000. We show that several companies’ bidding behaviour deviates strongly from theoretical predictions. In particular some companies’ evaluation of the added advantage of having a large license rather than a small license seemed to change dramatically during the auction for no obvious reason. We conclude that it is less well understood than previously believed how spectrum auctions work, and whether they lead to an efficient allocation of spectrum.