An Experimental Basis for Public Policy Initiatives

Advances in communications technology and the impetus for deregulation have stimulated the development of new types of markets, some of which are implemented by public agencies on very large scales, e.g. national broadcasting spectrum auctions. In other cases, policy issues arise from the consideration of an economic reorganization of an existing market, e.g. a merger. This paper surveys the use of laboratory experiments in the development and testing of these new types of economic activity, and for evaluating possible effects of changes in existing markets. Specific applications to be considered include: auctions of landing slots, broadcasting bandwidth licenses, tradable emissions permits, and irrigation permits.