Working Paper: NBER ID: w14441
Authors: Patrick Bajari; Jungwon Yeo
Abstract: The Federal Communications Commission (FCC) has used auctions to award spectrum since 1994. During this time period, the FCC has experimented with a variety of auctions rules including click box bidding and anonymous bidding. These rule changes make the actions of bidders less visible during the auction and also limit the set of bids which can be submitted by a bidder during a particular round. Economic theory suggests that tacit collusion may be more difficult as a result. We examine this proposition using data from 4 auctions: the PCS C Block, Auction 35, the Advanced Wireless Service auction and the 700 Mhz auction. We examine the frequency of jump bids, retaliatory bids and straightforward bids across these auctions. While this simple descriptive exercise has a number of limitations, the data suggests that these rule changes did limit firms' ability to tacitly collude.
Keywords: No keywords provided
JEL Codes: L00; L41; L51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Introduction of click box bidding (D44) | Limitation of jump bidding (D44) |
| Limitation of jump bidding (D44) | Harder to sustain collusion (D43) |
| Anonymous bidding (D44) | Reduction in retaliatory bidding (D44) |
| Reduction in retaliatory bidding (D44) | Harder to sustain collusion (D43) |
| Higher minimum opening bids (D44) | Decrease in likelihood of collusive behavior (L12) |
| Decrease in likelihood of collusive behavior (L12) | Increase in financial risks associated with bidding on unwanted licenses (G32) |