Collusive Bidding in the FCC Spectrum Auctions
Collusive Bidding in the FCC Spectrum Auctions
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Publication or External Link
Date
2002
Authors
Cramton, Peter
Schwartz, Jesse A.
Advisor
Citation
"Collusive Bidding in the FCC Spectrum Auctions," (with Jesse Schwartz) Contributions to Economic Analysis & Policy, 1:1, www.bepress.com/bejeap/contributions/vol1/iss1/art11, 2002.
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Abstract
This paper describes the bid signaling that occurred in many of the FCC
spectrum auctions. Bidders in these auctions bid on numerous spectrum licenses
simultaneously, with bidding remaining open on all licenses until no bidder
is willing to raise the bid on any license. Simultaneous open bidding allows
bidders to send messages to their rivals, telling them on which licenses to bid
and which to avoid. This "code bidding" occurs when one bidder tags the last
few digits of its bid with the market number of a related license. We examine
how extensively bidders signaled each other with retaliating bids and code bids
in the DEF-?block PCS spectrum auction. We and that only a small fraction
of the bidders commonly used retaliating bids and code bids. These bidders
won more than 40% of the spectrum for sale and paid significantly less for their
overall winnings.