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Property Rights to Radio Spectrum in Guatemala and El Salvador: An Experiment in Liberalization

Author

Listed:
  • Hazlett Thomas W

    (George Mason University, School of Law)

  • Ibarguen Giancarlo

    (Universidad Francisco Marroquin)

  • Leighton Wayne

    (Federal Communications Commission)

Abstract

In most countries, wireless communications rely on administrative allocation of radio spectrum. The inefficiencies associated with this centralized approach have led economists, starting with Coase in 1959, to suggest propertyzing radio spectrum. Critics of this approach assert that property rights impose prohibitive transaction costs and inhibit development of wireless services. Reforms enacted in Guatemala (in 1996) and El Salvador (in 1997) have largely implemented policies suggested by Coase, yielding a natural experiment. Evidence generated in the mobile telephone market suggests that these regimes are associated with relatively efficient policy outcomes, including abundant spectrum availability and a high degree of competitiveness, and with correspondingly low retail prices and high rates of output (minutes of use). Further, such markets appear to avoid high transaction costs in the public or private sectors. We conclude that these liberal reforms tend to produce results consistent with Coases policy conjecture.

Suggested Citation

  • Hazlett Thomas W & Ibarguen Giancarlo & Leighton Wayne, 2007. "Property Rights to Radio Spectrum in Guatemala and El Salvador: An Experiment in Liberalization," Review of Law & Economics, De Gruyter, vol. 3(2), pages 437-484, December.
  • Handle: RePEc:bpj:rlecon:v:3:y:2007:i:2:n:10
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    Citations

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    Cited by:

    1. Thomas W. Hazlett, 2008. "Optimal Abolition of FCC Spectrum Allocation," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 103-128, Winter.
    2. 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.
    3. Minervini, Leo Fulvio, 2014. "Spectrum management reform: Rethinking practices," Telecommunications Policy, Elsevier, vol. 38(2), pages 136-146.
    4. Thomas W. Hazlett, 2008. "Property Rights and Wireless License Values," Journal of Law and Economics, University of Chicago Press, vol. 51(3), pages 563-598, August.
    5. Cave, Martin, 2013. "Extending competition in network industries: Can input markets circumvent the need for an administered access regime?," Utilities Policy, Elsevier, vol. 27(C), pages 82-92.

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