NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Measuring the Efficiency of an FCC Spectrum Auction

Patrick Bajari, Jeremy T. Fox

NBER Working Paper No. 11671
Issued in October 2005
NBER Program(s):   IO

FCC spectrum auctions sell licenses to provide mobile phone service in designated geographic territories. We propose a method to structurally estimate the deterministic component of bidder valuations and apply it to the 1995–1996 C-block auction. We base our estimation of bidder values on a pairwise stability condition, which implies that two bidders cannot exchange licenses in a way that increases total surplus. Pairwise stability holds in many theoretical models of simultaneous ascending auctions, including some models of intimidatory collusion and demand reduction. Pairwise stability is also approximately satisfied in data that we examine from economic experiments. The lack of post-auction resale also suggests pairwise stability. Using our estimates of deterministic valuations, we measure the allocative efficiency of the C-block outcome.

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This paper was revised on October 14, 2009

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Document Object Identifier (DOI): 10.3386/w11671

Published: Jeremy T. Fox & Patrick Bajari, 2013. "Measuring the Efficiency of an FCC Spectrum Auction," American Economic Journal: Microeconomics, American Economic Association, vol. 5(1), pages 100-146, February.

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