MARKETS don’t simply emerge, but are created by the state, argued Karl Polanyi, an economist, in “The Great Transformation”. This is certainly true for radio spectrum, an intangible natural resource, which governments now regularly sell in auctions. The most intricate ever organised came to an end in America on February 10th, bringing in $19.6bn.

When America’s Federal Communications Commission (FCC) started auctioning spectrum in 1994, it did so because lotteries and “beauty pageants” to allocate the scarce resource seemed otherworldly when billions were at stake. Two decades later the FCC again tried something new, because the established auction system, in turn, was no longer adequate. With most spectrum compatible with today’s technology already allocated, the agency could only satisfy ever-growing demand from mobile carriers by convincing current holders of big slices, mostly broadcasters, to give up some of their licences.

The FCC’s solution was to organise not one but two sets of sell-offs, collectively called an “incentive auction”. The first set finds out the prices at which broadcasters are willing to part with radio waves (hence “incentive”). The second determines how much mobile operators are willing to pay for that spectrum. The rules are Byzantine and involve repackaging of spectrum into usable blocks, but broadly speaking the process comes to a close when the bidding price exceeds the selling price. If not, both sets of auctions are repeated, starting with fewer blocks of spectrum on offer alongside lower prices.

This time round it took the FCC four attempts to match supply and demand. In the first reverse auction last March, the agency obtained commitments from broadcasters to sell 126 megahertz of spectrum for $86.4bn. In the end they gave up 84 megahertz for more than $10bn, for which bidders paid $19.6bn, with the difference going mostly to America’s Treasury. Before wireless operators can start using their new spectrum, however, they will have to take part in a third auction, which will determine by the end of March the exact frequencies they get.

Compared with the FCC’s previous auction in early 2015, which brought in $41bn for 65 megahertz, the proceeds are disappointing. There is criticism of the complex process, which lasted a year and cost a remarkable $207m. Yet such gripes seem unfair. It is the auction of 2015 that is an outlier; the results of the latest one are actually in line with earlier spectrum sell-offs (see chart). The real test will be whether regulators elsewhere will again copy the FCC’s novel approach. Europe, for instance, could certainly do with this new type of auction: as in America, demand for spectrum outstrips supply and broadcasters are loth to give up their licences.

Another question is what type of system the FCC will introduce once all the available spectrum has been shuffled around. The incentive auction was a step towards a dynamic market, as it also earmarked some spectrum for shared unlicensed use (which will particularly please those who make and use wireless gadgets). Perhaps, one day, small slices will be traded as much online advertising is today, with virtual property being auctioned off in real time. Such a system would certainly qualify as being the most complex market ever created.