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Ownership Concentration and Strategic Supply Reduction

Author

Listed:
  • Ulrich Doraszelski
  • Katja Seim
  • Michael Sinkinson
  • Peichun Wang

Abstract

We explore the implications of ownership concentration for the recently concluded incentive auction that repurposed spectrum from broadcast TV to mobile broadband usage in the United States. We document significant multilicense ownership of TV stations. We show that in the reverse auction, in which TV stations bid to relinquish their licenses, multilicense owners have an inventive to withhold some TV stations to drive up prices for their remaining TV stations. Using a large-scale valuation and simulation exercise, we find that this strategic supply reduction increases payouts to TV stations by between 13.5 percent and 42.4 percent.

Suggested Citation

  • Ulrich Doraszelski & Katja Seim & Michael Sinkinson & Peichun Wang, 2025. "Ownership Concentration and Strategic Supply Reduction," American Economic Review, American Economic Association, vol. 115(3), pages 903-944, March.
    • Handle: RePEc:aea:aecrev:v:115:y:2025:i:3:p:903-44
    DOI: 10.1257/aer.20162018
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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • H82 - Public Economics - - Miscellaneous Issues - - - Governmental Property
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L88 - Industrial Organization - - Industry Studies: Services - - - Government Policy

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