Design of the 3G Spectrum Auctions in the UK and in Germany

This paper analyses the auction designs chosen for awarding 3G licences in the UK and Germany and compares them with respect to revenues and bidders' surplus using a laboratory experiment. In our study with a given number of bidders, the German design leads to higher revenues. However, bidder surplus in the German design is lower and bidders face a severe exposure problem. Because this might discourage participation, it will probably lead to less competitive bidding in real applications.