Homework Help: econ

Posted by Tiffany on Tuesday, June 10, 2008 at 9:23am.

The FCC is planning to auction wireless spectrum rights, with the goal of maximizing the revenue that it receives from the auction. These rights will almost certainly be used to support wireless communications devices, such as cell phones, pagers, etc. The FCC hires your team to advise it on the proper structure for the auction. You have to address the following questions:
a. Assume that all the bidders plan to operate wireless services (rather than, for example, to resell their wireless rights). Do you think this is more likely to be a common value auction (the rights will ultimately have the same value whoever wins) or a private value auction (the value will be very different for different bidders, based on characteristics of the bidders)? Why?
b. Would you recommend that the FCC use a English auction or a sealed bid auction? A first-price auction or a second-price auction? Why? How does your answer to part (a) affect your answer to part (b)?

econ - economyst, Tuesday, June 10, 2008 at 1:44pm
tough question.
Here is a link that summarizes the myriad of types of auctions.
http://en.wikipedia.org/wiki/Auction

For a) my knee jerk reaction was a common value auction (but I could be pursuaded otherwise).
For b) definately not an English auction. The FCC should assume all bidders are well prepared. As I think the auction is common value, all bidders are prepared, and that spectrum is highly desireable, I think I would go with a first price sealed bid auction. But again, I could be pursuaded otherwise.

Do some research then take a shot

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