Economics

Auction theory generates essential insights for the design of auctions in practice. Frequency auctions and negative auctions to supply white spots in network supply are the result of a detailed game-theoretical preliminary analysis. Frequency auctions have been used in Germany since 1996. WIK developed the auction design and accompanied the government authority for telecommunications and postal services (now the Federal Network Agency) in conducting the first auction and all subsequent frequency auctions (1999, E-GSM frequencies; 2000 UMTS auction; 2010 Digital Dividend I; 2015 700 MHz frequencies; 2019 5G frequencies).

Microeconomic models offer a simplified representation of reality and can offer a target-oriented approach when  reliable data on research objectives is not available or cannot be collected. WIK-Consult can develop mathematical models which depict a market situation and derive implications for the economic behaviour of the actors. The assumption is that the actors maximise certain objective functions under fixed framework conditions. We use this method in the area of multi-sided markets, frequency auctions and behavioural economics. When analysing consumer decisions in technology-driven markets, we also draw on modelling approaches from the field of information systems. Here, we use path models based on estimates from empirical data to map influences on human decision-making behaviour.

We have in-depth market and industry knowledge of the telecommunications, internet, postal and energy markets, and conduct continuous monitoring and perform regular analyses of these markets. Of particular interest are assessments regarding market power and the development of competition. To aid authorities in assessing these dynamics, we carry out supply and demand analyses, prepare price analyses and undertake international benchmarking. A key aspect of a successful market analysis is to systematically define and segment the market based on a substitutability assessment and thereafter to assess whether any actors have significant market power / dominance, as indicated by the ability to act independently of competitors and consumers. Where necessary we partner with recognised legal experts.

The aim of our analyses is to identify potential competition challenges, opportunities and dependencies and provide appropriate recommendations. We have studied market dynamics over many years and have played a major role in advising the European Commission as well as regulatory authorities and industry in this area.

Experiments in economic research offer the opportunity to test economic theory or open questions in behavioural economics. By analysing the decisions made by test subjects under controlled conditions, we can determine causal relationships and examine the effects of existing or future economic, political or social measures. In addition to monitoring, experiments are another pillar of WIK's evidence-based economic research and have been applied in a working paper in the context of online advertising and ad-blocking use.