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

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. * This paper was prepared for presentation at the 2001 Telecommunications Policy Research Conference held in Alexandria, Virginia, October 27-29, 2001. It is an outcome of an earlier paper by Anandalingam, Bagchi and Kwon (2000) which specifically looked at spectrum auctions in India. Vickrey Auctions for Spectrum in Anandalingam Developing Countries