Auctions

Learning Objectives: To consider how auctions compate to other allocation mechanisms. To understand different types of auction and apply them to real examples.
Case:

  • Hild, M., Dwidevy, A., and Raj, A., (2004) “The Biggest Auction Ever: 3G Licensing in Western Europe”, Darden Business Publishing
  • Discussion question: What are the alternatives to auctions?

In October 2020 Paul Milgrom and Robert Wilson were awarded a Nobel prize for their work on auction theory and design. Tim Harford provided a neat overview of their contribution in the Financial Times. As he says,

A well-designed auction forces bidders to reveal the truth about their own estimate of the prize’s value. At the same time, the auction shares that information with the other bidders. And it sets the price accordingly. It is quite a trick.

In this lecture video Tim Roughgarden “provides a detailed case study of the 2016-2017 Federal Communications Commission incentive auction for repurposing wireless spectrum”. It demonstrates how economics, computer science and business can coincide to solve complete real world problems.

Consider the following video:

Having read the 3G case,

  • Is there evidence of the Coase theorem in the 3G case?
  • Is there evidence of the Transitional Gains Trap in the 3G case?
Instructor resource: The Biggest Auction Ever: What Happened Next?, February 2019

Here’s more detail on spectrum auctions:


These resources form part of my Managerial Economics course map. You can watch the full YouTube playlist here. This page ties into Chapter 3 of ‘Economics: A Complete Guide for Business‘.

 

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