DP3072 | Strange Bids: Bidding Behaviour in the United Kingdom's Third Generation Spectrum Auction

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This Paper studies bidding behaviour in the auction of radio spectrum for third generation mobile telephone services which took place in the United Kingdom in the spring of 2000. We show that several companies? bidding behaviour deviates strongly from theoretical predictions. In particular some companies? evaluation of the added advantage of having a large license rather than a small license seemed to change dramatically during the auction for no obvious reason. We conclude that it is less well understood than previously believed how spectrum auctions work, and whether they lead to an efficient allocation of spectrum.