Forming an Agreement between Buyers of Frequencies for Open Access at a Spectrum Auction

Abstract

The problem of an unadvertised agreement between buyers of non-exclusive rights at a spectrum auction for the agreed formation of price bids is considered from the viewpoint of game theory and operations research. Such auction participants are potential freeriders claiming free access to the frequencies being sold, which results in their non-standard behavior. Two ways of organizing an agreement for an auction with pricing according to the Vickrey rule are proposed for the full awareness of the participants about the amount of income of the partners from using the range of frequencies purchased by pooling. It is shown that the lack of information results in an equal distribution of payment between negotiating buyers, and this greatly reduces their competitive advantage in a spectrum auction. The Clarke–Groves mechanism that stimulates the identification of true preferences is analyzed and a modified version of it is developed. Unfortunately, analysis shows it does not make sense for any of them to be applied to this problem. An alternative way of choosing a joint solution based on the Germeyer–Vatel model is discussed.