Auction Design and Tacit Collusion in FCC Spectrum Auctions

• Main Authors: BAJARI, Patrick, YEO, Jungwon
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2009
• Subjects: FCC spectrum auctions; Simultaneous ascending auctions; Collusion; Auction design; Behavioral Economics; Economics
• Online Access: https://ink.library.smu.edu.sg/soe_research/190; https://ink.library.smu.edu.sg/context/soe_research/article/1189/viewcontent/spectrum.pdf
• Institution: Singapore Management University

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 that can be submitted during a particular round. Economic theory suggests that tacit collusion may be more difficult as a result. We examine this proposition using data from four auctions: the PCS-C Block, the PCS-C&F Block Reauction, 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 suggest that these rule changes have limited firms’ ability to tacitly collude.