The German 4G Spectrum Auction: Design and Behaviour

Peter Cramton and Axel Ockenfels

Economic Journal, 2017, vol. 127, issue 605, F305-F324

Abstract: 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.

Date: 2017
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