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Published 2000 | public
Journal Article

Mutually Destructive Bidding: The FCC Auction Design Problem

Abstract

In general, synergies across license valuations complicate the auction design process. Theory suggests that a "simple" (i.e., non-combinatorial) auction will have difficulty in assigning licenses efficiently in such an environment. This difficulty increases with increases in "fitting complexity." In some environments, bidding may become "mutually destructive." Experiments indicate that a properly designed combinatorial auction is superior to a simple auction in terms of economic efficiency and revenue generation in bidding environments with a low amount of fitting complexity. Concerns that a combinatorial auction will cause a "threshold" problem are not borne out when bidders for small packages can communicate.

Additional Information

© 2000 Kluwer Academic Publishers. We thank Bill Maher, Dave Porter, and Tim Sloan for helpful comments on an earlier version of this paper. We also thank two anonymous referees for their helpful comments. All remaining errors are our own.

Additional details

Created:
August 19, 2023
Modified:
October 17, 2023