Benny Moldovanu (U of Bonn) - PowerPoint PPT Presentation

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Benny Moldovanu (U of Bonn)

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... can learn a lot from auction experts. Feedback ... Experts : 'use an auction' Incumbents : Outcome : Beauty contest. Incumbents win the most valuable licenses ... – PowerPoint PPT presentation

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Title: Benny Moldovanu (U of Bonn)


1
  • Benny Moldovanu (U of Bonn)
  • Auctions and Competition
  • Comments
  • Sander Onderstal (U of Amsterdam)

2
Set-up
  • Summary
  • Feedback
  • Auctions in the Netherlands
  • Good news
  • Bad news
  • Questions

3
Summary
  • Auction design matters a lot
  • Design has to balance conflicting goals
  • E.g. auction revenue vs. competition
  • (Dutch) Policy makers can learn a lot from
    auction experts

4
Feedback
  • I agree with Moldovanus analysis and policy
    conclusions
  • Did Dutch policy makers take the advice of
    auction experts (including Moldovanu) seriously?

5
Dutch Auctions
  • Bad news UMTS
  • Good news Petrol stations
  • Bad news Commercial radio
  • Bad news Wireless Local Loop (WLL)
  • Good news Phone numbers
  • Bad news Welfare-to-work programs

6
UMTS
  • UK
  • Revenue 22.5 109
  • Costs for expertise 0.000,1 109
  • Paul Klemperer
  • European governments would be foolish not to
    copy the UK in auctioning the radiospectrum
  • NL
  • Potential revenue 10.4 109
  • Costs for expertise ? 0

7
UMTS
  • Paul Klemperer
  • but they would be equally foolish to blindly
    copy the UK design without attention to their
    local circumstances
  • Emiel Maasland
  • Billions from auctions? Wishful thinking!
  • NL
  • Potential revenue 10.4 109
  • Realized revenue 2.7 109

8
Petrol stations
  • Goal improve competition
  • Problem ever lasting licenses
  • Goeree, Minkman, and Moldovanu
  • It is desirable to include a first-price element
    in the auction.
  • The government can improve the auction by having
    the current owner pay the difference between the
    highest and the second highest bid if he wins

9
Commercial radio
  • Experts
  • use an auction
  • Incumbents
  • Outcome
  • Beauty contest
  • Incumbents win the most valuable licenses
  • Janssen and Maasland the allocation was
    probably inefficient

10
WLL
  • Eric Van Damme
  • The government wishes to stimulate the
    knowledge economy,
  • but, although knowledge about how to organize an
    auction is available at four Dutch universities,
  • the government chooses a do-it-yourself
    approach,
  • ignoring this knowledge.

11
Phone numbers
  • 0900 356 9377
  • 0900 FLOWERS
  • Staatscourant
  • The auction model that will be used, is almost
    the same as the model that was proposed by
    SEOR-ECRi

12
Welfare-to-work programs
Experience Price ( 1000) Success rate
A lot 30 4 20 80 50
Sufficient 20 4 5 15 70 80 40
Some 10 5 6 10 60 70 30
None 0 6 7 5 50 60 20
7 0 50 10
13
Questions
  • How to convince policy makers?
  • How to improve the auction for welfare-to-work
    programs?
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