Allocating Spectrum through the Use of Auctions

Authors

Terrence J. Schroepfer

Abstract

This article provides an overview of auctions and proposes a bidding format for use in a potential spectrum auction. An auction is a mechanism designed to recreate the competitive market when competition is hindered by a limited number of participants or a lack of pricing information. Although supporters of spectrum auctions frequently point to the potential revenue generation from a sale of spectrum, most economists support auctions because, if implemented in accordance with economic theory, they enhance economic efficiency.

The author proposes a sealed second-bid format for use in any potential spectrum auction. This format protects against collusion through the use of sealed bids, and reduces the costs associated with bidding because knowledge of a competitor's valuation of the goods is not necessary. The author also recommends that a reserve price be set for spectrum that would compensate existing users to move to other portions of the spectrum and increase Treasury revenue.

Recommended Citation

Terrence J. Schroepfer, Allocating Spectrum through the Use of Auctions, 14 UC Law SF Comm. & Ent. L.J. 35 (1991).
Available at: https://repository.uclawsf.edu/hastings_comm_ent_law_journal/vol14/iss1/2