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American Economic Journal: Microeconomics: Vol. 5 No. 1 (February 2013)

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Measuring the Efficiency of an FCC Spectrum Auction

Article Citation

Fox, Jeremy T., and Patrick Bajari. 2013. "Measuring the Efficiency of an FCC Spectrum Auction." American Economic Journal: Microeconomics, 5(1): 100-146.

DOI: 10.1257/mic.5.1.100

Abstract

We propose a method to structurally estimate the deterministic component of bidder valuations in FCC spectrum auctions, and apply it to the 1995-1996 C block auction. We base estimation on a pairwise stability condition: two bidders cannot exchange two licenses in a way that increases the sum of their valuations. Pairwise stability holds in some theoretical models of simultaneous ascending auctions under intimidatory collusion and demand reduction. Pairwise stability results in a matching game approach to estimation. We find that a system of four large regional licenses would raise the allocative efficiency of the C block outcome by 48 percent. (JEL D44, D45, H82, L82)

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Authors

Fox, Jeremy T. (U MI)
Bajari, Patrick (U MN)

JEL Classifications

D44: Auctions
D45: Rationing; Licensing
H82: Governmental Property
L82: Entertainment; Media

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