Friday, May 27, 2011
Efficiency or Competition? A Structural Analysis of Canada's AWS Auction and the Set-Aside Provision
Posted by D. Daniel Sokol K
yle Hyndman (Southern Methodist University) and Christopher F. Parmeter (University of Miami) explain Efficiency or Competition? A Structural Analysis of Canada's AWS Auction and the Set-Aside Provision.
ABSTRACT: In 2008 Industry Canada auctioned 105MHz of spectrum to a group of bidders that included incumbents and potential new entrants into the Canadian mobile phone market, raising $4.25 billion. In an effort to promote new entry, 40MHz of spectrum was set-aside for new entrants. We adapt the methodology of Bajari and Fox (2009) to the Canadian auction setting in an effort to estimate the implicit cost (in terms of lower auction efficiency) of this policy. Our results indicate that revenue would have been approximately 10% higher without the set-aside.