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Economic and policy implications of spectrum license fee payment methods

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  • Kwon, Youngsun
  • Lee, Jungsub
  • Oh, Youngkyun
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    Abstract

    This paper argues that "Do auctions raise consumer prices?" is a misleading question. License fee payment methods, rather than spectrum assignment methods, are key factors that bring forth different market outcomes in the wireless telecommunication industry. This paper analyzes and discusses the effects of three spectrum license fee payment methods--upfront lump-sum fees, royalties, and profit sharing--on economic efficiency, spectrum supply, and government revenue. Royalties create distortions in product and factor markets but can induce the government to increase spectrum supply and encourage firms' investments. A caveat is that the analyses are based on the model assuming monopoly market and information certainty.

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    Bibliographic Info

    Article provided by Elsevier in its journal Telecommunications Policy.

    Volume (Year): 34 (2010)
    Issue (Month): 3 (April)
    Pages: 175-184

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    Handle: RePEc:eee:telpol:v:34:y:2010:i:3:p:175-184

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    Related research

    Keywords: Spectrum license fee Lump-sum fee Royalty Risk sharing Consumer price;

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    Cited by:
    1. Lee, Hyeongjik & Seol, Seong-ho & Kweon, Soo Cheon, 2012. "An event study of the first telecommunications spectrum auction in Korea and "the winner's curse"," 23rd European Regional ITS Conference, Vienna 2012 60394, International Telecommunications Society (ITS).

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