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License Complementarity and Package Bidding: US Spectrum Auctions

  • Mo Xiao
  • Zhe Yuan
American Economic Journal: Microeconomics
vol. 14, no. 4, November 2022
(pp. 420-64)
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Abstract

US spectrum licenses cover geographically distinct areas and often complement each other. A bidder seeking to acquire multiple licenses is exposed to the risk of winning only isolated patches. Using Auction 73 data, we model the bidding process as an entry game with interdependent markets and evolving bidder beliefs. 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.

Citation

Xiao, Mo, and Zhe Yuan. 2022. "License Complementarity and Package Bidding: US Spectrum Auctions." American Economic Journal: Microeconomics, 14 (4): 420-64. DOI: 10.1257/mic.20210091

Additional Materials

JEL Classification

  • D44 Auctions
  • H82 Governmental Property
  • L96 Telecommunications
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