Frank Riedel, and
"Low price equiulibrium in multi-unit auctions: the GSM spectrum auction in Germany"
JEL codes: D44, D45
Keywords: multi-unit auctions, spectrum auctions, telecommunications, industrial organization, game theory
Abstract: The second-generation (GSM) spectrum auction in Germany is probably the most clear cut example of a low price outcome in a simultaneous ascending-bid multi-unit auction. The present paper gives an account of the events, describes the auction rules and market conditions, and provides a game theoretic explanation of low price equilibrium in simultaneous, ascending-bid multi-unit auctions. In particular, it is shown that in the unique equilibrium that survives iterated elimination of dominated strategies, the efficient allocation is reached at minimum bids.