Sealed-bid versus ascending spectrum auctions

Bedard, NC; Goeree, JK; Louis, P; Zhang, J

Sealed-bid versus ascending spectrum auctions

Bedard, NC Goeree, JK Louis, P Zhang, J

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Publisher:: Springer Nature
Publication Type:: Journal Article
Citation:: Experimental Economics, pp. 1-26

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Field	Value	Language
dc.contributor.author	Bedard, NC
dc.contributor.author	Goeree, JK
dc.contributor.author	Louis, P
dc.contributor.author	Zhang, J https://orcid.org/0000-0003-3274-5245
dc.date.accessioned	2023-06-19T04:29:43Z
dc.date.available	2023-06-19T04:29:43Z
dc.identifier.citation	Experimental Economics, pp. 1-26
dc.identifier.issn	1386-4157
dc.identifier.issn	1573-6938
dc.identifier.uri	http://hdl.handle.net/10453/170786
dc.description.abstract	<jats:title>Abstract</jats:title><jats:p>We compare the first-price sealed-bid (FPSB) auction and the simultaneous multiple-round auction (SMRA) in an environment based on the recent sale of 900 MHz spectrum in Australia. Three bidders compete for five indivisible items. Bidders can win at most three items and need to obtain at least two to achieve profitable scale, i.e. items are complements. Value complementarities, which are a common feature of spectrum auctions, exacerbate the “fitting problem” and undermine the usual logic for superior price discovery in the SMRA. We find that the FPSB outperforms the SMRA across a range of bidding environments: in terms of efficiency, revenue, and protecting bidders from losses due to the exposure problem. Moreover, the FPSB exhibits superior price discovery and almost always results in competitive (“core”) prices unlike the SMRA, which frequently produces prices that are too low because of demand-reduction or too high because of the exposure problem. We demonstrate the robustness of our findings by considering two-stage variants of the FPSB and SMRA as well as environments in which bidders know their own values but not the distributions from which values are drawn.</jats:p>
dc.language	en
dc.publisher	Springer Nature
dc.relation.ispartof	Experimental Economics
dc.relation.isbasedon	10.1007/s10683-023-09805-x
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1401 Economic Theory, 1402 Applied Economics, 1505 Marketing
dc.subject.classification	Economics
dc.title	Sealed-bid versus ascending spectrum auctions
dc.type	Journal Article
utslib.for	1401 Economic Theory
utslib.for	1402 Applied Economics
utslib.for	1505 Marketing
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	closed_access	*
dc.date.updated	2023-06-19T04:29:42Z
pubs.publication-status	Published online

Abstract:

AbstractWe compare the first-price sealed-bid (FPSB) auction and the simultaneous multiple-round auction (SMRA) in an environment based on the recent sale of 900 MHz spectrum in Australia. Three bidders compete for five indivisible items. Bidders can win at most three items and need to obtain at least two to achieve profitable scale, i.e. items are complements. Value complementarities, which are a common feature of spectrum auctions, exacerbate the “fitting problem” and undermine the usual logic for superior price discovery in the SMRA. We find that the FPSB outperforms the SMRA across a range of bidding environments: in terms of efficiency, revenue, and protecting bidders from losses due to the exposure problem. Moreover, the FPSB exhibits superior price discovery and almost always results in competitive (“core”) prices unlike the SMRA, which frequently produces prices that are too low because of demand-reduction or too high because of the exposure problem. We demonstrate the robustness of our findings by considering two-stage variants of the FPSB and SMRA as well as environments in which bidders know their own values but not the distributions from which values are drawn.

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http://hdl.handle.net/10453/170786