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The Case for Unlicensed Spectrum


  • Paul Milgrom

    () (Department of Economics, Stanford University)

  • Jonathan Levin

    () (Department of Economics, Stanford University)

  • Assaf Eilat

    () (Compass Lexecon)


Demand for wireless data communication has risen rapidly in the past few years, raising important policy questions about how to allocate radio spectrum for this purpose. Historically, the US government has designated some spectrum for licensed use and a smaller but significant amount for unlicensed use. We discuss the advantages of each approach, and explain why unlicensed spectrum in particular has been a catalyst for innovation, and an important complement to licensed spectrum. We also explain why allocating a portion of spectrum for unlicensed use need not reduce government revenue from selling spectrum licenses, and the serious flaws in proposed auction-based approaches for determining the fraction of spectrum to leave unlicensed.

Suggested Citation

  • Paul Milgrom & Jonathan Levin & Assaf Eilat, 2011. "The Case for Unlicensed Spectrum," Discussion Papers 11-002, Stanford Institute for Economic Policy Research.
  • Handle: RePEc:sip:dpaper:11-002

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    References listed on IDEAS

    1. Aoki, Masahiko, 2010. "Corporations in Evolving Diversity: Cognition, Governance, and Institutions," OUP Catalogue, Oxford University Press, number 9780199218530.
    2. Rothwell, Geoffrey, 1996. "Organizational Structure and Expected Output at Nuclear Power Plants," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 482-488, August.
    3. Bushnell, James & Hobbs, Benjamin F. & Wolak, Frank A., 2009. "When It Comes to Demand Response, Is FERC Its Own Worst Enemy?," The Electricity Journal, Elsevier, vol. 22(8), pages 9-18, October.
    4. Ricardo Alonso & Wouter Dessein & Niko Matouschek, 2008. "When Does Coordination Require Centralization?," American Economic Review, American Economic Association, vol. 98(1), pages 145-179, March.
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    Cited by:

    1. Gregory L. Rosston, 2013. "Increasing Wireless Value: Technology, Spectrum, and Incentives," Discussion Papers 12-015, Stanford Institute for Economic Policy Research.
    2. Reed, David & Lansford, James, 2014. "Wi-Fi as a Commercial Service: New Technology and Policy Implications," Telecommunications Policy, Elsevier, vol. 38(8), pages 827-837.
    3. Katz, Raul Luciano & Beltrán, Fernando, 2015. "Socio-economic impact of alternative spectrum assignment approaches in Latin America," 2015 Regional ITS Conference, Los Angeles 2015 146321, International Telecommunications Society (ITS).

    More about this item


    radio spectrum; unlicensed spectrum; managed commons; wi-fi;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy


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