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Spectrum policy and competition in mobile data

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  • Grønnevet, Gorm A.
  • Hansen, Bjørn
  • Reme, Bjørn-Atle

Abstract

This paper studies the effects of radio spectrum sharing between two mobile operators within a Hotelling model of duopoly. We apply the M/M/1 queuing model to analyze the effect of mandated sharing of radio spectrum on the equilibrium connection quality, data volumes and prices. Our analysis shows that spectrum sharing can have adverse effects. First, it creates an incentive for the mobile operators to increase the load in their network in order to weaken the competitor. A higher network load leads to more network congestion and suboptimal equilibrium connection quality. Second, consumer surplus decreases and industry profit increases for a wide range of parameter values in the model. In other words, spectrum sharing could lead to a transfer from consumers to producers.

Suggested Citation

  • Grønnevet, Gorm A. & Hansen, Bjørn & Reme, Bjørn-Atle, 2016. "Spectrum policy and competition in mobile data," Information Economics and Policy, Elsevier, vol. 37(C), pages 34-41.
    • Handle: RePEc:eee:iepoli:v:37:y:2016:i:c:p:34-41
    DOI: 10.1016/j.infoecopol.2016.07.003
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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