TY - JOUR
T1 - License Complementarity and Package Bidding
T2 - US Spectrum Auctions
AU - Xiao, Mo
AU - Yuan, Zhe
N1 - Funding Information:
* Xiao: Department of Economics, Eller College of Management, University of Arizona ([email protected]. edu); Yuan: School of Economics and China Center for Digital Economy, Zhejiang University (email: yyyuanzhe@ gmail.com). John Asker was coeditor for this article. We thank seminar participants at the Kelley School of Business at Indiana University; the Federal Trade Commission; Stanford Graduate School of Business; Toulouse School of Economics; University of Massachusetts Amherst; University of Toronto; University of California, Los Angeles; Virginia Tech; the 2018 International Industrial Organization Conference; the 2018 Shanghai University of Finance and Economics IO summer school; the 2018 Montreal IO conference; the 2018 Colombian Workshop on Structural IO; the 2019 ASSA annual meetings; and the 2020 NBER IO winter meeting for comments and suggestions. We have especially benefited from discussions with Alessandro Iaria, Brent Hickman, Jeremy Fox, Ariel Pakes, Christian Rojas, Gabriel Weintraub, and Chenyu Yang. We are grateful for financial support from the 2018 NET Institute summer grant.
Publisher Copyright:
© 2022, American Economic Journal: Microeconomics. All Rights Reserved.
PY - 2022
Y1 - 2022
N2 - US spectrum licenses cover geographically distinct areas and often complement each other. A bidder seeking to acquire multiple licenses is exposed to the risk of winning only isolated patches. Using Auction 73 data, we model the bidding process as an entry game with interdependent markets and evolving bidder beliefs. Bidders’ decisions on bidding provide bounds on licenses’ stand-alone values and complementarity between licenses. We show that the effects of package bidding on bidders’ exposure risks depend on package format and size. More importantly, package bidding increases auction revenue substantially at the cost of reducing bidder surplus and increasing license allocation concentration.
AB - US spectrum licenses cover geographically distinct areas and often complement each other. A bidder seeking to acquire multiple licenses is exposed to the risk of winning only isolated patches. Using Auction 73 data, we model the bidding process as an entry game with interdependent markets and evolving bidder beliefs. Bidders’ decisions on bidding provide bounds on licenses’ stand-alone values and complementarity between licenses. We show that the effects of package bidding on bidders’ exposure risks depend on package format and size. More importantly, package bidding increases auction revenue substantially at the cost of reducing bidder surplus and increasing license allocation concentration.
UR - http://www.scopus.com/inward/record.url?scp=85163377310&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85163377310&partnerID=8YFLogxK
U2 - 10.1257/mic.20210091
DO - 10.1257/mic.20210091
M3 - Article
AN - SCOPUS:85163377310
SN - 1945-7669
VL - 14
SP - 420
EP - 464
JO - American Economic Journal: Microeconomics
JF - American Economic Journal: Microeconomics
IS - 4
ER -