License Complementarity and Package Bidding: US Spectrum Auctions

Mo Xiao and Zhe Yuan

American Economic Journal: Microeconomics, 2022, vol. 14, issue 4, 420-64

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.

JEL-codes: D44 H82 L96 (search for similar items in EconPapers)
Date: 2022
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Working Paper: License Complementarity and Package Bidding: The U.S. Spectrum Auctions (2018)
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DOI: 10.1257/mic.20210091

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