Efficiency or competition? A structural econometric analysis of Canada's AWS auction and the set-aside provision

Kyle Hyndman, Christopher Parmeter

Research output: Contribution to journalArticle

2 Scopus citations

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 languageEnglish (US)
Pages (from-to)821-839
Number of pages19
JournalProduction and Operations Management
Volume24
Issue number5
DOIs
StatePublished - Jan 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

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