Abstract
In 2008, Industry Canada auctioned 105 MHz 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, 40 MHz of spectrum was set-aside for new entrants. In order to estimate the implicit cost of the set-aside provision, we estimate the parameters of the bidders' profit function via a maximum match estimator based on the notion of pairwise stability in matches. We find that all telecommunications firms valued both geographic complementarities across auction licenses as well as absolute spectrum. Under a reasonable alternative scenario, our results indicate that the set-aside led to a total profit loss of approximately 10%.
Original language | English (US) |
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Pages (from-to) | 821-839 |
Number of pages | 19 |
Journal | Production and Operations Management |
Volume | 24 |
Issue number | 5 |
DOIs | |
State | Published - May 1 2015 |
Keywords
- maximum score
- pairwise stability
- set-aside
- spectrum auction
- structural matching
ASJC Scopus subject areas
- Management Science and Operations Research
- Industrial and Manufacturing Engineering
- Management of Technology and Innovation