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Economic and policy implications of spectrum license fee payment methods

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

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.

Suggested Citation

  • Kwon, Youngsun & Lee, Jungsub & Oh, Youngkyun, 2010. "Economic and policy implications of spectrum license fee payment methods," Telecommunications Policy, Elsevier, vol. 34(3), pages 175-184, April.
  • Handle: RePEc:eee:telpol:v:34:y:2010:i:3:p:175-184
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    Cited by:

    1. Kwon, Youngsun & Kim, Buhm-Kyu, 2012. "Royalties vs. upfront lump-sum fees in data communication environments," Telecommunications Policy, Elsevier, vol. 36(2), pages 127-139.
    2. 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).
    3. Kwon, Youngsun & Kwon, Joungwon, 2017. "Telecommunications Policy: An evaluation of 40 years' research history," 28th European Regional ITS Conference, Passau 2017 169475, International Telecommunications Society (ITS).

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