Collusive bidding: Lessons from the FCC spectrum auctions

The Federal Communications Commission (FCC) spectrum auctions use a simulta neous ascending auction design. Bidders bid on numerous communication licen ses simultaneously, with bidding remaining open on all licenses until no bi dder is willing to bid higher on any license. With full revelation of biddi ng information, simultaneous open bidding allows bidders to send messages t o their rivals, telling them on which licenses to bid and which to avoid. T hese strategies can help bidders coordinate a division of the licenses, and enforce the proposed division by directed punishments. We examine solution s to mitigate collusive bidding in the spectrum auctions, and then apply th ese ideas to the design of daily electricity auctions.