Tacit Collusion in the AWS-1 Auction: The Signaling Problem
Posted: Friday July 20, 2007
Dr. Gregory Rose
Abstract
This study utilizes the methodology developed by Peter Cramton and Jesse A. Schwartz in their 2002 paper on tacit collusion in the PCS D, E, and Block auction to identify signaling behaviors by bidders in the AWS-1 auction and measure their effects.
The principal signaling behavior identified was retaliatory bidding, which occurred in the AWS-1 auction at a slightly higher level than in the PCS D, E, and F auction. Significant indirect demand reduction effects were observed in the AWS-1 auction which call into question whether the auction was revenue maximizing.
The study concludes that signaling remains a serious problem for FCC spectrum auctions and recommends that anonymous bidding rules be adopted for the 700 MHz and all future FCC spectrum auctions.
Read the study