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

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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

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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

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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.

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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

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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
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Questions

• How to convince policy makers?
• How to improve the auction for welfare-to-work
  programs?