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Spectrum limits and competition in mobile markets: the role of licence fees

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  • Gruber, Harald

Abstract

The paper discusses the impact of scarcity of frequency spectrum on the performance of the mobile telecommunications industry. An oligopoly model with endogenous sunk costs illustrates the trade off between ex ante extraction of oligopoly rents and market entry of firms. The determination of the licence fee through an auction provides scope for setting market structure endogenously: the higher the licence fee, the lower the number of firms sustained by the market. High licence fees may be a signal for post-entry collusion. Differences across national regulatory frameworks with respect to the conditions for allocation of spectrum licenses may induce problems of fair competition in an integrated market.

Suggested Citation

  • Gruber, Harald, 2001. "Spectrum limits and competition in mobile markets: the role of licence fees," Telecommunications Policy, Elsevier, vol. 25(1-2), pages 59-70, February.
    • Handle: RePEc:eee:telpol:v:25:y:2001:i:1-2:p:59-70
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    Citations

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    Cited by:

    1. Erik Bohlin & Gary Madden & Aaron Morey, 2010. "An Econometric Analysis of 3G Auction Spectrum Valuations," RSCAS Working Papers 2010/55, European University Institute.
    2. Jithesh Arayankalam & Satish Krishnan, 2023. "ICT-Based Country-Level Determinants of Social Media Diffusion," Information Systems Frontiers, Springer, vol. 25(5), pages 1881-1902, October.
    3. Cambini, Carlo & Garelli, Nicola, 2017. "Spectrum fees and market performance: A quantitative analysis," Telecommunications Policy, Elsevier, vol. 41(5), pages 355-366.
    4. Joshua S. Gans & Stephen P. King & Julian Wright, 2005. "Wireless Communications," Monash Economics Working Papers archive-45, Monash University, Department of Economics.
    5. Ralf Dewenter & Justus Haucap, 2007. "Demand Elasticities for Mobile Telecommunications in Austria," Ruhr Economic Papers 0017, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    6. repec:zbw:rwirep:0017 is not listed on IDEAS
    7. Jeanjean, Francois & Lebourges, Marc & Liang, Julienne, 2018. "Mobile investment and traffic per capita tend to increase with license duration," 29th European Regional ITS Conference, Trento 2018 184949, International Telecommunications Society (ITS).
    8. Jeanjean, Francois & Lebourges, Marc & Liang, Julienne, 2019. "The impact of license duration on tangible investments of mobile operators," Telecommunications Policy, Elsevier, vol. 43(9).
    9. Hemant K. Sabat, 2008. "Spectrum acquisition strategies adopted by wireless carriers in the USA," Information Systems Frontiers, Springer, vol. 10(1), pages 77-102, March.
    10. Gary Madden & Erik Bohlin & Paitoon Kraipornsak & Thien Tran, 2014. "The determinants of prices in the FCC's 700 MHz spectrum auction," Applied Economics, Taylor & Francis Journals, vol. 46(17), pages 1953-1960, June.
    11. Dewenter Ralf & Haucap Justus, 2008. "Demand Elasticities for Mobile Telecommunications in Austria," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 228(1), pages 49-63, February.
    12. Park, Minsoo & Lee, Sang-Woo & Choi, Yong-Jae, 2011. "Does spectrum auctioning harm consumers? Lessons from 3G licensing," Information Economics and Policy, Elsevier, vol. 23(1), pages 118-126, March.

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