The Role of Auctions in Allocating Public Resources

This paper provides an economic framework within which to consider the effectiveness and limitations of auction markets. The paper looks at the use of auctions as a policy instrument and the effects of auction design on consumer interests, the efficient allocation of resources, and industry competitiveness.Australia; Research; Ascending-bid auction; Auctions; Bidders; Conservation funds; Descending-bid auction; Dutch auction; English auction; Environmental Management; First-price sealed-bid auction; Infrastructure; Markets; Oral auction; Outcry auction; Pollutant emission permits; Power supply contracts; Public resources; Radio- spectrum; Second-price sealed-bid auction Spectrum licences; Vickrey auction; Water rights;

Radio Spectrum and the Disruptive Clarity OF Ronald Coase.

In the Federal Communications Commission, Ronald Coase (1959) exposed deep foundations via normative argument buttressed by astute historical observation. The government controlled scarce frequencies, issuing sharply limited use rights. Spillovers were said to be otherwise endemic. Coase saw that Government limited conflicts by restricting uses; property owners perform an analogous function via the "price system." The government solution was inefficient unless the net benefits of the alternative property regime were lower. Coase augured that the price system would outperform the administrative allocation system. His spectrum auction proposal was mocked by communications policy experts, opposed by industry interests, and ridiculed by policy makers. Hence, it took until July 25, 1994 for FCC license sales to commence. Today, some 73 U.S. auctions have been held, 27,484 licenses sold, and $52.6 billion paid. The reform is a textbook example of economic policy success. We examine Coase‘s seminal 1959 paper on two levels. First, we note the importance of its analytical symmetry, comparing administrative to market mechanisms under the assumption of positive transaction costs. This fundamental insight has had enormous influence within the economics profession, yet is often lost in current analyses. This analytical insight had its beginning in his acclaimed early article on the firm (Coase 1937), and continued into his subsequent treatment of social cost (Coase 1960). Second, we investigate why spectrum policies have stopped well short of the property rights regime that Coase advocated, considering rent-seeking dynamics and the emergence of new theories challenging Coase‘s property framework. One conclusion is easily rendered: competitive bidding is now the default tool in wireless license awards. By rule of thumb, about$17 billion in U.S. welfare losses have been averted. Not bad for the first 50 years of this, or any, Article appearing in Volume II of the Journal of Law & Economics.

Comparitive Evaluation of Geometric Dynamic Channel Allocation Over Other Channel Allocation Schemes

Wireless services are one of the strongest growth areas in telecommunications today. Cellular voice is well established as a high-end service in most areas, but demand is increasing rapidly. In cellular systems, the geographical region is split using a regular topology, into cells each containing one base station. The base station should assign a channel that is not currently used within some specified distance. There are many kinds of channel assignment methods used in mobile communication starting with Fixed Channel Assignment (FCA), through Dynamic Channel Assignment (DCA) and Hybrid Channel Assignment (HCA). Personal Communication Services (PCS's) have been introduced as a mass-market phone service. The capacity, however, is now a critical issue for all of these services. The solution to the increasing spectrum efficiency demand in Personal Communication Services (PCS's) is the implementation of Dynamic Channel Allocation (DCA) strategy with distributed control. This thesis concentrates on one ,specific class of dynamic channel allocation called the Geometric Dynamic Channel Allocation (GDCA). The main feature of the GDCA lies in its ability to organise the dynamic resource assignment so that the resulting carrier usage pattern resembles what corresponds to other strategies , as long as that is compatible with the offered traffic pattern. Besides that, the overall performance advantage of GDCA over other strategies increases , as the offered traffic becomes larger

Spectrum Auction Design

Spectrum auctions are used by governments to assign and price licenses for wireless communications. The standard approach is the simultaneous ascending auction, in which many related lots are auctioned simultaneously in a sequence of rounds. I analyze the strengths and weaknesses of the approach with examples from US spectrum auctions. I then present a variation, the package clock auction, adopted by the UK, which addresses many of the problems of the simultaneous ascending auction while building on its strengths. The package clock auction is a simple dynamic auction in which bidders bid on packages of lots. Most importantly, the auction allows alternative technologies that require the spectrum to be organized in different ways to compete in a technology-neutral auction. In addition, the pricing rule and information policy are carefully tailored to mitigate gaming behavior. An activity rule based on revealed preference promotes price discovery throughout the clock stage of the auction. Truthful bidding is encouraged, which simplifies bidding and improves efficiency. Experimental tests and early auctions confirm the advantages of the approach.Auctions, spectrum auctions, market design, package auction, clock auction, combinatorial auction

The dynamics of computerization in a social science research team : a case study of infrastructure, strategies, and skills

This paper examines the dynamics of Computerization in a PC-oriented research group through a case study. The time and skill in integrating computing into the labor processes of research are often significant "hidden costs" of computerization. Computing infrastructure plays a key role in reducing these costs may be enhanced by careful organization. We illustrate computerization strategies that we have found to be productive and unproductive. Appropriate computerization strategies depend as much on the structuring of resources and interests in the larger social setting, as on a technical characterization of tasks

Package Bidding for Spectrum Licenses

The FCC was an innovator in adopting the rules of the simultaneous ascending-price auction for its sales of spectrum licenses. While these rules have performed well in the auctions conducted so far (and would perform even better with the design improvements suggested in our first report), there are two inherent limitations in any design that seeks to assign and price the licenses individually. First, such designs create strategic incentives for bidders interested in multiple licenses that are substitutes to reduce their demands for some of the licenses in order to reduce the final prices of the others; this is the demand reduction problem. Second, even if bidders behave non-strategically, there is a fundamental problem with the basic concept of individual-license pricing when licenses are complementary. In simultaneous ascending-price auctions, from a bidder's perspective this is the exposure problem. A bidder who is unsuccessful in bidding for a large package of licenses may be left with a partial package whose total price cannot be justified in the absence of those complementary licenses it failed to win. This problem is present in any auction mechanism that sells licenses individually, with no opportunity to bid on packages. In this report our task is confined to analyses of the merits of package bidding and the practical problems of implementation. In our next report, we will outline proposals for the details of the procedural rules and other aspects of implementing a practical design, as well as the software development that would be necessary.Auctions; Spectrum Auctions; Multiple-Round Auctions; Efficiency

zCap: a zero configuration adaptive paging and mobility management mechanism

Today, cellular networks rely on fixed collections of cells (tracking areas) for user equipment localisation. Locating users within these areas involves broadcast search (paging), which consumes radio bandwidth but reduces the user equipment signalling required for mobility management. Tracking areas are today manually configured, hard to adapt to local mobility and influence the load on several key resources in the network. We propose a decentralised and self-adaptive approach to mobility management based on a probabilistic model of local mobility. By estimating the parameters of this model from observations of user mobility collected online, we obtain a dynamic model from which we construct local neighbourhoods of cells where we are most likely to locate user equipment. We propose to replace the static tracking areas of current systems with neighbourhoods local to each cell. The model is also used to derive a multi-phase paging scheme, where the division of neighbourhood cells into consecutive phases balances response times and paging cost. The complete mechanism requires no manual tracking area configuration and performs localisation efficiently in terms of signalling and response times. Detailed simulations show that significant potential gains in localisation effi- ciency are possible while eliminating manual configuration of mobility management parameters. Variants of the proposal can be implemented within current (LTE) standards