Working Paper: CEPR ID: DP2810
Authors: Philippe Jehiel; Benny Moldovanu
Abstract: Europe has taken the global lead in the issuance of third generation (3G) licences for mobile telecommunications according to the UMTS/IMT-2000 family of standards. We survey the recent European UMTS licence auctions and compare their outcomes with the predictions of a simple auction model that emphasises future market structure as a main determinant of valuations for licenses. Since the main goal of most spectrum allocation procedures is economic efficiency, and since consumers (who are affected by the ensuing market structure) do not participate at the auction stage, good designs must alleviate the asymmetry among incumbents and potential entrants by actively encouraging entry.
Keywords: licence auctions; market entry; umts
JEL Codes: D44; D45; L13; L96
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Auction design (D44) | Market entry (L17) |
| Auction design (D44) | Valuations of licenses (D45) |
| Market entry (L17) | Consumer surplus (D11) |
| Market entry (L17) | Economic efficiency (D61) |
| Incumbents' presence (D72) | Valuations of licenses (D45) |
| Number of licenses available (D45) | Economic efficiency (D61) |
| Good auction designs (D44) | Competition among firms (L13) |
| Good auction designs (D44) | Number of firms in the market (L19) |