Problem of forming an agreement between buyers of open access frequencies on a spectrum auction

Abstract

The problem of a non-publicized agreement between buyers of unlicensed spectrum in a spectrum auction for the coordinated formation of their price bids is considered in terms of game theory and operations research. Such auction participants are potential free riders, they hope on free access to the frequencies being sold, which causes their non-standard behavior. We propose two options for organizing an agreement for Vickrey auction in the case of complete information about the amounts of participants’ income from the use of the frequency purchased with shared expenses. It is shown that the lack of information leads to an equalizing distribution of payment between contracting buyers, and this significantly reduces their competitive advantage in the spectrum auction. Being a mechanism stimulating the true preferences uncovering, the Clark–Groves mechanism is analyzed, and its modified version is developed. Unfortunately, according to the results of the study, its application to the considered problem seems inappropriate. An alternative possibility of choosing a joint decision based on the Germeier–Vatel model is discussed.