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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.

Suggested Citation

  • 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.
  • Handle: RePEc:ucp:jlawec:v:51:y:2008:i:3:p:563-598
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    Cited by:

    1. 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.
    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. Michelle Connolly & Nelson Sa & Azeem Zaman & Chris Roark & Akshaya Trivedi, 2018. "The Evolution of U.S. Spectrum Values Over Time," Working Papers 121, Brandeis University, Department of Economics and International Businesss School.
    4. Benoît P. Freyens, 2012. "Licensing Options for Digital Dividend Spectrum: An Australian Perspective," Chapters,in: Regulation and the Performance of Communication and Information Networks, chapter 12 Edward Elgar Publishing.
    5. Vogelsang Ingo, 2013. "The Endgame of Telecommunications Policy? A Survey," Review of Economics, De Gruyter, vol. 64(3), pages 193-270, December.
    6. Thomas W. Hazlett & Roberto E. Muñoz, 2009. "A welfare analysis of spectrum allocation policies," RAND Journal of Economics, RAND Corporation, vol. 40(3), pages 424-454.
    7. Arturo Basaure & Varadharajan Sridhar & Heikki Hämmäinen, 2016. "Adoption of dynamic spectrum access technologies: a system dynamics approach," Telecommunication Systems: Modelling, Analysis, Design and Management, Springer, vol. 63(2), pages 169-190, October.
    8. Minervini, Leo Fulvio, 2014. "Spectrum management reform: Rethinking practices," Telecommunications Policy, Elsevier, vol. 38(2), pages 136-146.
    9. Gary Madden & Erik Bohlin & Paitoon Kraipornsak & Thien Tran, 2014. "The determinants of prices in the FCC's 700 MHz spectrum auction," Applied Economics, Taylor & Francis Journals, vol. 46(17), pages 1953-1960, June.
    10. Mark A. Jamison, 2011. "Liberalization and Regulation of Telecoms, Electricity, and Gas in the United States," Chapters,in: International Handbook of Network Industries, chapter 21 Edward Elgar Publishing.

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