Auctions are used by many organizations to assign property rights for a wide variety of goods. In our paper, we are concerned with the use of auctions by the European Union to assign radio spectrum licenses. Without state involvement, firms use the radio spectrum until its value is dissipated. Thus, it is preferable for the state to assign and enforce radio spectrum rights. Further, because of the non-competitive structure in the telecommunications market, it is also preferable for the state to assign radio spectrum rights in such a way as to encourage new entrants. Of the available allocation mechanisms, auctions are the most efficient in assigning rights and encouraging a competitive market. Of the available auction designs, a combinatorial auction provides several key advantages over others in encouraging efficient allocations, permitting new entrants, and allowing bidders to optimize dynamically. Drawing on evidence from the European Third Generation auction and the Federal Communications Commission auctions, we conclude that the European Union could improve social welfare by centrally allocating radio spectrum licenses using a combinatorial auction.
Date of Completion
Twist, Alex B., "Recommendations for the Optimal Allocation of Radio Spectrum Licenses in the European Union" (2007). Economics Theses. 40.