Choosing an auction format

Abstract

This chapter explores in detail how the main formats for spectrum auctions operate, looking at: Simultaneous Multiple Round Ascending Auctions (SMRAs) with individual bids and a first-price rule; and Combinatorial Clock Auctions (CCAs) with package bids in an initial stage of multiple rounds, followed by sealed bids and a second-price rule; and less commonly used, a third format of sealed bids in a single round.• Auction design for spectrum involves many trade-offs because there is no perfect design. To maximise economic efficiency, the regulator seeks to encourage straightforward bidding. Challenges include assisting bidders to refine their values through price discovery, to manage their bid strategies given their budget constraints, and to mitigate risks from substitution and aggregation effects.