Peter C. Cramton

Work with auction design

Cramton is a major advocate for the use of auctions, rather than the grandfathering, of emission permits. He has helped to design many electricity auctions that are conducted throughout the world. In the area of telecommunications, together with Larry Ausubel and Paul Milgrom, he invented the combinatorial clock auction. This combinatorial auction design has been used for more than ten major spectrum auctions in Europe, Canada and Australia.

In financial markets, together with Eric Budish and John Shim, he has been a critic of high-frequency trading. His book, Combinatorial Auctions, edited with Yoav Shoham and Richard Steinberg, has more than 1,300 citations. The book explains why and how to conduct auctions with package bidding.

He has provided advice on electricity auctions and electricity market restructuring in New England, Alberta, Colombia, the UK, France and New Zealand. He serves on the Board of Directors of the Electric Reliability Council of Texas (ERCOT), the electricity grid operator in Texas. He has helped to guide spectrum regulators in the US, Canada, the UK and Australia, and he has advised bidders in many countries and industries. He has helped to change the common sales practice for rough diamonds from opaque cartel pricing to transparent auctions.

One of Cramton's latest projects is to reduce traffic congestion and pollution emissions through use of scheduling, routing and real-time pricing.

Entrepreneurship

Along with his academic work, Cramton has been involved in entrepreneurial and board activities with many organizations. In 1993, he founded Cramton Associates, which provides consultancy on auctions and market design to governments and organizations. Through Cramton Associates, Cramton has advised many governments in the design of complex auction markets.

In 2025, Cramton founded Forward Market Design, a consultancy specializing in the design, simulation, and engineering of markets for industries of the 21st century.

Cramton serves as the Chief Economist of Innovative Auctions, which provides web-based auction systems to governments and industry. He is also the Chief Economist of Tremor, a company that uses smart markets to improve reinsurance markets. Cramton is a member of the Academic Advisory Group for CartaX, a company that provides a platform to trade private equity.

In 1995, Cramton joined Market Design Inc. as a principal together with Paul Milgrom, Robert Wilson, Preston McAfee and John McMillan. Market Design Inc. (MDI) was founded to bring innovative auction ideas to practice. MDI's main application was spectrum auctions, although between 1995 and 2016 MDI did projects in many industries and countries. In 1999, Cramton became president of MDI and in 2003 he became chairman of the board, a post he held until MDI closed in 2016.

In 1999, together with Larry Ausubel and Paul Milgrom, Cramton led an effort to organize the exchange of TV broadcast spectrum for mobile communications use—an effort called Spectrum Exchange. Cramton and his partners worked from 1999 to 2001 to organize a spectrum exchange between TV broadcasters and mobile carriers. The effort ultimately failed, because the mobile carriers had enough spectrum from early spectrum auctions and TV broadcasters had unrealistic views about what they should be paid given the extremely high spectrum auction prices observed during the dotcom and telecom bubble of 2000. Moreover, Spectrum Exchange did not have a good solution to the holdout problem: the problem of an essential TV station holding out to capture the windfall gains. That solution had to come from the Federal Communications Commission (FCC) and required enabling legislation. Ultimately, the need for more spectrum led Congress to pass enabling legislation for a broadcast incentive auction. The FCC held the auction from March 2016 to March 2017. The auction made available 70 MHz of contiguous spectrum in the TV band for mobile communications. This enabled the smaller network operators, such as T-Mobile, to gain essential low-band spectrum to compete effectively with the larger incumbents, AT&T and Verizon.