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Ownership Concentration and Strategic Supply Reduction

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  • Doraszelski, Ulrich
  • ,
  • Sinkinson, Michael
  • Wang, Peichun

Abstract

We explore the implications of ownership concentration for the recently-concluded incentive auction that re-purposed spectrum from broadcast TV to mobile broadband usage in the U.S. We document significant multi-license ownership of TV stations. We show that in the reverse auction, in which TV stations bid to relinquish their licenses, multi-license owners have an incentive to withhold some TV stations to drive up prices for their remaining TV stations. Using a large-scale valuation exercise, we find that this strategic supply reduction conservatively increases payouts to TV stations by between 7.0% and 20.7%.

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  • Doraszelski, Ulrich & , & Sinkinson, Michael & Wang, Peichun, 2016. "Ownership Concentration and Strategic Supply Reduction," CEPR Discussion Papers 11173, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11173
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