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Benny Moldovanu (U of Bonn) “Auctions and Competition” Comments Sander Onderstal (U of Amsterdam)

Benny Moldovanu (U of Bonn) “Auctions and Competition” Comments Sander Onderstal (U of Amsterdam). Set-up. Summary Feedback Auctions in the Netherlands Good news Bad news Questions. Summary. Auction design matters a lot Design has to balance conflicting goals

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Benny Moldovanu (U of Bonn) “Auctions and Competition” Comments Sander Onderstal (U of Amsterdam)

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  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 Moldovanu’s 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

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

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