On the Use of Vickrey Auctions for Spectrum Allocation in Developing Countries

TL;DR

This paper evaluates the suitability of Vickrey second-price auctions for spectrum allocation in developing countries, proposing a new Vickrey share auction mechanism to better meet specific axioms.

Contribution

It critically assesses Vickrey auctions for spectrum in developing countries and introduces the Vickrey share auction as a novel alternative.

Findings

Vickrey auctions may not satisfy key axioms in developing countries.

A new Vickrey share auction mechanism is proposed.

The proposed mechanism aligns better with spectrum allocation needs.

Abstract

In this paper, we assess the applicability of auctions based on the Vickrey second price model for allocating wireless spectrum in developing countries. We first provide an overview of auction models for allocating resources. We then examine the experience of auctioning spectrum in different countries. Based on this examination, we posit some axioms that seem to have to be satisfied when allocating spectrum in most developing countries. In light of these axioms, we provide a critical evaluation of using Vickrey second- price auctions to allocate spectrum in developing countries. We suggest the use of a new auction mechanism, the Vickrey "share auction" which will satisfy many of these axioms.