| I empirically investigate three topics: reputation effect in auctions, technological innovation after deregulation, and competing costs in an auction. I use the data from the Japanese and U.S. cellular phone markets, which require small installation costs and are supposed to be contestable relative to ground-based telecommunication services.; First, I examine the impact of bidder's reputation on auctions by incorporating auction theory with Kreps and Wilson's (1982) reputation-based entry deterrence model.{09}By treating the FCC spectrum rights auctions as sequential auctions, in stead of simultaneous auctions, I find that in one earlier auction of 1997, an incumbent carrier seems to have taken advantage of the endogenous reputation effect, which distorts the auction's efficiency. I also find that in the later auctions, the FCC succeeds in controlling the appearance of the reputation effect by changing its auction designs.; Secondly, I address the post-deregulation performance of the Japanese cellular phone market by demand estimation with product differentiation. By using a discrete consumer choice model, the nested logit model, I find that the incumbent carrier could increase its market dominance by network externalities and providing new functional services successively. I also find that the incumbent uses the long-term contract discount to keep loyal consumers who look forward to innovative services. In contrast, the entrant carriers tend to rely on the marketing strategies such as family discount. Hence, despite market re-concentration, the incumbent's technological innovation so far benefits consumers.; Finally, I focus on the presence of competing costs in auctions, which conventional auction theory ignores. Following Krishna and Mogan (1997), I employ the war of attrition game to capture implicit competing costs in an open-bid ascending auction, the FCC spectrum rights auction. A semi-parametric estimation model, which incorporates the log-linear specification of bidders' valuations with the symmetric Bayesian Nash equilibrium bid function, shows that the competing cost is significantly positive and varies according to the FCC's auction design. I also show that the FCC auction belongs to the independent private value paradigm by partially linear nonparametric regression. |
