Optimal Control of Broadcasting Spectrum with Variety-Reception Trade-off and Consumers’ Income Sensitivity
AbstractThis paper uses optimal control theory to derive a desirable trajectory of the number of royalties-paying users of state-owned spectrum for broadcasting. The spectrum royalties are set by the public planner to maximize the consumers’ utilities over an infinite planning horizon. The consumers’ utilities are generated from the quality of the service of the broadcasting industry, from the consumption of other goods, and from the public services financed by the spectrum royalties. The number of broadcasters adjusts to above-normal profits. The quality of the broadcasting industry’s service is determined by variety and reception. The trade-off between the benefits from higher variety and royalties’ revenues and the costs of intensified interferences associated with the number of broadcasters is considered. The positive information-dissemination effect and the negative effort-diversion effect of the quality of the broadcasting industry’s service on the consumers’ aggregate income are also considered. The possibility of convergence of the derived trajectory of the number of broadcasters to steady state and the comparative statics of the steady state are analyzed.
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Bibliographic InfoPaper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number wp12-10.
Length: 19 pages
Date of creation: 2012
Date of revision:
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Postal: School of Economics, University of Wollongong, Northfields Avenue, Wollongong NSW 2522 Australia
Phone: +612 4221-3659
Fax: +612 4221-3725
Web page: http://business.uow.edu.au/econ/index.html
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Over-The-Air Broadcasts; Variety; Interferences; Spectrum Royalties; Optimal Control;
Find related papers by JEL classification:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
- L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-12 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jérome Adda & Marco Ottaviani, 2005. "The transition to digital television," Economic Policy, CEPR & CES & MSH, vol. 20(41), pages 160-209, 01.
- Webbink, Douglas W, 1973. "Regulation, Profits and Entry in the Television Broadcasting Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 21(2), pages 167-76, April.
- Thomas W. Hazlett, 2008. "Optimal Abolition of FCC Spectrum Allocation," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 103-128, Winter.
- Massimo Motta & Michele Polo, 1997. "Concentration and public policies in the broadcasting industry: the future of television," Economic Policy, CEPR & CES & MSH, vol. 12(25), pages 293-334, October.
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