Spectrum auctions and telecom pricing in India: from 2G to Jio

Abstract

Auctions are a market institution with rules governing resource allocation on the basis of bids from participants. Various kinds of objects are sold via auctions: art, property, spectrum, wine etc. The major formats of auctions are: 1) Dutch Auction — prices are decreased till the highest bidder gets the object 2) English Auctions — prices are increased 3) Sealed bid auctions - closed bids submitted by the participants Based on the format, there can be first price auctions where the winner pays his bid or second price auctions where the bidder pays the second highest bid. In auctions, participants have a private value. The auction can either be a common value auction ora private value auction. The bidding strategy of the participant depends heavily on the format of the auction. The principal advantage of using an auction is its ability to allocate the object being auctioned to those who value it the most, and thus would best be able to use it.