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Property Rights and Wireless License Values

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  • Thomas W. Hazlett

Abstract

While extending the scope of spectrum property rights promotes efficiency, such reforms are often deterred by equity concerns. Theoretically, however, the windfalls may be negative. Relaxing license restrictions may increase profits by allowing enhanced productivity, yet liberalization across a class of licensees can reduce the expected profits by increasing competitiveness. This article examines license value changes for regimes that decisively shift toward private property rights in radio spectrum by analyzing the average prices paid in international cellular phone license auctions during 1995-2001. This unique data set encompasses 1,365 licenses assigned by competitive bidding in 38 auctions held in 24 countries. Licenses awarded by regimes with more expansive spectrum property rights generated winning bids that were 61 percent lower, adjusting for other factors. This evidence reverses the equity argument against liberalization over the policy margin studied and is consistent with Coase's view that property rights lower retail prices, thereby increasing efficiency. (c) 2008 by The University of Chicago. All rights reserved..

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Bibliographic Info

Article provided by University of Chicago Press in its journal The Journal of Law and Economics.

Volume (Year): 51 (2008)
Issue (Month): 3 (08)
Pages: 563-598

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Handle: RePEc:ucp:jlawec:v:51:y:2008:i:3:p:563-598

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Web page: http://www.journals.uchicago.edu/JLE/

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Cited by:
  1. Hazlett, Thomas W. & Muñoz, Roberto E., 2009. "Spectrum allocation in Latin America: An economic analysis," Information Economics and Policy, Elsevier, vol. 21(4), pages 261-278, November.
  2. Ingo Vogelsang, 2013. "The Endgame of Telecommunications Policy? A Survey," Review of Economics, Lucius & Lucius, vol. 64(3), pages 193-269.
  3. Mayo, John W. & Wallsten, Scott, 2010. "Enabling efficient wireless communications: The role of secondary spectrum markets," Information Economics and Policy, Elsevier, vol. 22(1), pages 61-72, March.

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