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Spectrum Licensing, Policy Instruments and Market Entry

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  • Gary Madden
  • Erik Bohlin
  • Thien Tran
  • Aaron Morey

Abstract

Competition policy attempts to address the potential for market failure by encouraging competition in service markets. Often, in wireless communication service markets, national regulatory authorities seek to encourage entry via the spectrum assignment process. Instruments used include the assignment mode (auction or beauty contest), setting aside licenses and providing bidding (price and quantity) credits for potential entrants, and making more licenses (spectrum blocks) available than there are incumbent firms (excess licenses). The empirical analysis assesses the effectiveness of these policy instruments on encouraging entry. The econometric results show that the probability of entry is enhanced by using auction assignments and excess licenses. Furthermore, quantity, but not price, concessions encourage entry. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Gary Madden & Erik Bohlin & Thien Tran & Aaron Morey, 2014. "Spectrum Licensing, Policy Instruments and Market Entry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(3), pages 277-298, May.
    • Handle: RePEc:kap:revind:v:44:y:2014:i:3:p:277-298
    DOI: 10.1007/s11151-013-9405-9
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    Cited by:

    1. Cambini, Carlo & Garelli, Nicola, 2017. "Spectrum fees and market performance: A quantitative analysis," Telecommunications Policy, Elsevier, vol. 41(5), pages 355-366.
    2. Glenn A. Woroch, 2020. "Spectrum Concentration and Performance of the U.S. Wireless Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(1), pages 73-105, February.
    3. Cave, Martin & Nicholls, Rob, 2017. "The use of spectrum auctions to attain multiple objectives: Policy implications," Telecommunications Policy, Elsevier, vol. 41(5), pages 367-378.
    4. Bahia, Kalvin & Castells, Pau, 2022. "The impact of spectrum assignment policies on consumer welfare," Telecommunications Policy, Elsevier, vol. 46(1).
    5. 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.
    6. Woroch, Glenn A, 2020. "Spectrum Concentration and Performance of the U.S. Wireless Industry," Department of Economics, Working Paper Series qt8vv381jt, Department of Economics, Institute for Business and Economic Research, UC Berkeley.

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    More about this item

    Keywords

    Market entry; Policy instruments; Spectrum licensing; D82; L51; L96;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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