Collusive Bidding: Lessons from the FCC Spectrum Auctions

The Federal Communications Commission (FCC) spectrum auctions use a simultaneous ascending auction design. Bidders bid on numerous communication licenses simultaneously, with bidding remaining open on all licenses until no bidder is willing to bid higher on any license. With full revelation of bidding information, simultaneous open bidding allows bidders to send messages to their rivals, telling them on which licenses to bid and which to avoid. These strategies can help bidders coordinate a division of the licenses, and enforce the proposed division by directed punishments. We examine solutions to mitigate collusive bidding in the spectrum auctions, and then apply these ideas to the design of daily electricity auctions.     

Rent Seeking with Politically Contestable Rights to Tariff‐rate Import Quotas**

This paper analyzes rent seeking for agricultural import quotas and the associated waste of resources when politically contestable licenses are allocated to either or both importers and exporters. In a two‐stage simultaneous contest where firms seek rent for licenses and then bargain over the import/export price, it is shown that (1) rents are not dissipated completely because of uncertainty in allocation of “rights,” (2) the dissipation ratio increases if the country with a more competitive contest increases the probability of establishing licenses, (3) rent seeking may cause the market structure to change, (4) less rent is dissipated in the case of pre‐existing market power, and (5) allocation of multiple licenses decreases rent‐seeking outlays.     

Licensing process innovations when losersʼ messages determine royalty rates

We consider a licensing mechanism for process innovations that awards a limited number of unrestricted licenses to those firms that report the highest cost reductions, combined with royalty licenses to others. Firmsʼ messages are dual signals of their cost reductions: the message of those who win an unrestricted license signals their cost reduction to rival firms, while losersʼ messages influence the royalty rate set by the innovator. We explain why a sufficiently high threshold level for awarding the unrestricted license is essential to induce truth-telling, show that the innovator generally benefits from the proposed mechanism, and derive conditions for implementability by a modified second-price auction.     

Transferable Licenses Versus Nontransferable Licenses: What is the Difference?

This paper questions the presumption that transferable licenses are worth more and result in higher welfare. We show that the price of a transferable license may be lower than that of its nontransferable counterpart if the underlying quota is not very severe. However, transferability is preferable to nontransferability if consumer surplus and license revenue have equal weight in the welfare function. We also examine whether licenses will be monopolized by domestic producers with market power. The models have implications for several issues, including the design of pollution permits and how to maximize revenue from ticket sales.     

北京市人户分离人口状况分析及户籍制度改革的设想

利用北京市2005年1%人口抽样调查数据,分析北京市以及以北京市区县为单位的人户分离人口的状况,从中找出北京市外来人口的分布规律,寻求北京市人户分离人口的分布规律,找出存在的问题,并从户籍改革的角度提出解决北京市人户分离问题的建议。讨论的人户分离人口包括:户口在外地而调查登记时在本地(即本乡镇街道)的人,以及户口在本地,调查登记时在外地的人。     

A Bio-Economic Model of Community Incentives for Wildlife Management Under CAMPFIRE

This paper formulates a bio-economic model to analyze community incentives for wildlife management under benefit-sharing programs like the Communal Areas Management Programme for Indigenous Resources (CAMPFIRE) in Zimbabwe. Three agents influence the wildlife stock: a parks agency determines hunting quotas, outside poachers hunt illegally, and a local community may choose to protect wildlife by discouraging poaching. Wildlife generates revenues from hunting licenses and tourism; it also intrudes on local agriculture. We consider two benefit-sharing regimes: shares of wildlife tourism rents and shares of hunting licenses. Resource sharing does not necessarily improve community welfare or incentives for wildlife conservation. Results depend on the exact design of the benefit shares, the size of the benefits compared with agricultural losses, and the way in which the parks agency manages hunting quotas.     

SETTLING LAWSUITS WITH PIRATES

A firm licenses a product to overlapping generations of heterogeneous consumers. Consumers may purchase the product, pirate/steal it, or forego it. Higher consumer types enjoy higher gross benefits and are caught stealing at a higher rate. The firm may commit to an out-of-court settlement policy that is “soft” on pirates, so high types purchase the product and low types steal it until caught. Settlement contracts, which include both cash payments and licenses for future product use, facilitate price discrimination. Settlement may either create social value by expanding the market or destroy value by limiting market access and possibly deterring more efficient entrants.     

Auctions as coordination devices

This paper develops an economic argument relating auctions to high market prices. At the core of the argument is the claim that market competition and bidding in an auction should be analyzed as part of one game, where the pricing strategies in the market subgame depend on the bidding strategies during the auction. I show that when there are two licenses for sale the only equilibrium in the overall game that is consistent with the logic of forward induction is the one where firms bid an amount (almost) equal to the profits of the cooperative market outcome and follow a cooperative pricing strategy in the market game resulting in high prices. With three or more licenses the auction format co-determines whether or not the forward induction argument works.     

THE PRICE OF SILENCE: MARKETS FOR NOISE LICENSES AND AIRPORTS*

This article presents a market design for the management of noise pollution created by aircraft traffic around airports. A local market for noise licenses allows noise generators to compensate noise victims and to meet social acceptability. We show that the market allows the market designer to implement the social planner's optimal allocation of flights as long as the latter does not put too high a weight in his/her objective function on firms' profits compared to the disutility of noise pollution. The fact that local representatives of noise victims may be strategic players does not fundamentally alter this finding. Because of the market auctioneer's information constraints, noise licenses are likely to distribute windfall gains to residents, which alters the urban structure in the long run.     

Selling patent rights and the incentive to innovate

We show that an outside innovator has a higher incentive to innovate than an incumbent innovator, by auctioning off his patent rights exclusively to an incumbent firm. For significant innovations this is also superior to selling licenses directly.     

Walrasian prices in markets with tradable rights

In this paper, we consider an exchange economy where there is an external restriction for the consumption of goods. This restriction is defined by both, a cap on consumption of certain commodities and the requirement of an amount of rights for the consumption of these commodities. The caps for consumption are imposed exogenously due to the negative effects that the consumption may produce. The consumption rights or licenses are distributed among the agents. This fact leads to the possibility of establishing license markets. These licenses do not participate in agents’ preferences, however, the individual’s budgetary constraint may be modified, leading to a reassignment of resources. Our aim is to show the existence of a Walrasian equilibrium price system linking tradable rights prices with commodity prices.     

Bribery,inefficiency, and bureaucratic delay

We examine bribery in a dynamic setting with a partially honest bureaucracy. The presence of honest officials lowers the bribe that a corrupt official can extract from efficient applicants. Consequently, efficient applicants may face delays in receiving licenses, or may never receive licenses, as inefficient applicants are serviced ahead of them. An increase in the proportion of honest officials, while directly increasing the incidence of socially optimal decisions, can also induce greater inefficiencies (misallocation and delay) from corrupt officials. As a result, social welfare may be non-monotonic in the proportion of honest officials, and small differences in monitoring costs may lead to very different levels of corruption. Competition between officials can hurt efficiency; its desirability depends on the prevalence of applicants' ability to pay bribes.     

An Analysis of the Market for Taxicab Rides in New York City*

In the last few years, the city of New York has increased taxicab fares and relaxed a 59‐year‐old cap on the number of licenses. This article uses a dynamic equilibrium model of meeting frictions to quantify the impact of these policies on medallion prices and on the process that rules the meetings between passengers and taxicabs in New York City.     

On the superiority of fixed fee over auction in asymmetric markets

It is well known that selling licenses for the use of a cost-reducing innovation by auction yields a higher revenue compared to fixed fee in a symmetric Cournot industry. In this note we show that this result can be reversed in an asymmetric Cournot industry, i.e., the fixed fee policy can generate a strictly higher revenue than the auction policy in an industry where prior to the innovation firms are cost-asymmetric.     

Licensing of New Technology Versus Direct Foreign Investment: A General Equilibrium Analysis

In a general equilibrium model with sector-specific capital, a country which licenses new technology and imports capital itself would have lower national income than if it permitted direct investment by foreigners with rights to the technology. However, the reverse can be true if capital is mobile between sectors. Thus, licensing is a poor policy in the short run but can be a good policy in the long run.     

上游垄断背景下厂商提成特许策略研究

在原料供应厂商占据垄断地位的假设下,通过对比下游创新厂商提成特许前后的收益,对下游创新厂商的特许策略选择和创新激励进行了研究。研究结果表明:当技术创新规模较小时,下游创新厂商进行技术创新的激励增大,会对下游其他无创新的厂商进行技术特许;当技术创新规模较大时,下游创新厂商则不会进行技术特许。     

An Insiders' View of FCC Spectrum Auctions

After a long period of awarding spectrum licenses inefficiently, changes in the budget and budgetary process coupled with increases in the value of the spectrum for non-broadcast use led Congress to allow the Federal Communications Commission to award licenses through competitive bidding. Contrary to the perceived view of government bureaucracies as excessively cautious, the FCC used the newfound authority to adopt a novel approach to auction design—simultaneous multiple round auctions. The innovative auction design would not have been adopted without the successful collaboration between government economists and academic economists, who helped to formulate and refine the design so that decision makers at the FCC could be convinced that the novel technique was both superior and practical. The FCCs implementation of competitive bidding was not only rapid as mandated by Congress, but also much less costly than outside alternatives and allowed the integration of spectrum policy decisions and auction design. Experience from several auctions has led to a number of open questions and refinements. The FCC is trying to replicate the success with the original auction design by facilitating dialog between the agency and outside auction experts in order to address these issues.     

UMTS in France and Europe: How to allocate the licenses?

The awarding of UMTS mobile licenses in France gave rise to a passionate debate as well as to a rather fluctuating history. A beauty contest with a predetermined price was preferred to an auction mechanism, as opposed to what was decided in most European countries, in particular United Kingdom and Germany where licences' prices reached very high levels. In France, only two candidates could be selected from a first tendering and a second one is now being organized in order to allocate the two remaining licences, after the Government has drastically lowered the price of all four licenses. The purpose of the present contribution is to show that auctions, although refused in France for the sake of "controlability" of the awarding procedure, are indeed an appropriate means of spectrum allocation for mobile services, provided that the mechanism is carefully designed and adapted to the context, which may differ according to the country. We first summarize the main lessons from the auctions theory and then discuss the compared efficiency of different mechanisms and their resistance to predation or collusion. On this basis, we finally analyse the actual process of UMTS auctions in various European countries and we tentatively propose a backward fictitious scenario for France.     

INDUSTRIAL LICENSING,BRIBERY AND ALLOCATION EFFICIENCY*

In less developed countries where an industrial licensing policy governs the entry of new firms, and when government officials awarding these licenses are corrupt, an incumbent firm may deter entry by bribing the official to deny the license. The paper demonstrates that such bribery can lead to the exclusion of more efficient firms from the market. This contradicts the established result that bribery does not affect allocation efficiency.     

Negative effects of competition in a medical-service market

A market for medical care is characterized by uncertain, but inelastic demand and a ‘soft budget constraint’. We assume that in such a market, government decides on giving licenses to different private institutions to provide medical service. In this paper we present an argument as to why competition has a negative effect on social welfare and therefore government should only provide one license. We also explain why in such a market the profit-maximizing institutions install too high a capacity in comparison to a social optimum.