IDEAS home Printed from
   My bibliography  Save this paper

Channel Trading and Imperfect Competition: Good Trades and Bad Trades


  • Paul Levine

    (University of Surrey)

  • Neil Rickman

    (University of Surrey & CEPR)


We investigate the potential economic effects of spectrum trading amongst firms who require spectrum licences as part of their activities. Trading takes place within the technical interference constraints enforced by a regulator. The model accommodates a variety of markets and firms, as well as both chan- nel exchange and channel re-use (i.e. sharing across different markets). Our most detailed analytical results have focused on trade amongst oligopolists in a given (geographical) market. In this context, our results suggest that trade can enhance productive efficiency by placing licences in the hands of firms who value them most (i.e. low-cost firms). These are the ‘good trades’. However, there is a danger that this process may cause higher consumer prices which, in turn, could offset the welfare effects of lower cost production, the ‘bad trades’. An important outcome of our modelling is to make clear a role played by licences: they provide credible commitment mechanisms to restrict output.

Suggested Citation

  • Paul Levine & Neil Rickman, 2007. "Channel Trading and Imperfect Competition: Good Trades and Bad Trades," School of Economics Discussion Papers 1107, School of Economics, University of Surrey.
  • Handle: RePEc:sur:surrec:1107

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Christopher A. Pissarides, 1994. "Search Unemployment with On-the-job Search," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 457-475.
    2. Alan B. Krueger, 1999. "Measuring Labor's Share," American Economic Review, American Economic Association, vol. 89(2), pages 45-51, May.
    3. Stephen Nickell & Glenda Quintini, 2003. "Nominal wage rigidity and the rate of inflation," Economic Journal, Royal Economic Society, vol. 113(490), pages 762-781, October.
    4. Smith, Jennifer C, 2000. "Nominal Wage Rigidity in the United Kingdom," Economic Journal, Royal Economic Society, vol. 110(462), pages 176-195, March.
    5. Silva, José Ignacio & Toledo, Manuel, 2009. "Labor Turnover Costs And The Cyclical Behavior Of Vacancies And Unemployment," Macroeconomic Dynamics, Cambridge University Press, vol. 13(S1), pages 76-96, May.
    6. Donna Brown & Peter Ingram & Jonathan Wadsworth, 2004. "The Price is Right? Pay Settlements and Nominal Wage Rigidity in Britain," British Journal of Industrial Relations, London School of Economics, vol. 42(3), pages 507-525, September.
    7. Hoyt Bleakley & Ann E. Ferris & Jeffrey C. Fuhrer, 1999. "New data on worker flows during business cycles," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 49-76.
    8. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    9. Coles, Melvyn G. & Wright, Randall, 1998. "A Dynamic Equilibrium Model of Search, Bargaining, and Money," Journal of Economic Theory, Elsevier, vol. 78(1), pages 32-54, January.
    10. Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, vol. 95(1), pages 25-49, March.
    11. Katharine G. Abraham, 1987. "Help-Wanted Advertising, Job Vacancies, and Unemployment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(1), pages 207-248.
    12. Abowd, John M. & Kramarz, Francis, 2003. "The costs of hiring and separations," Labour Economics, Elsevier, vol. 10(5), pages 499-530, October.
    13. Bruce C. Fallick & Charles A. Fleischman, 2004. "Employer-to-employer flows in the U.S. labor market: the complete picture of gross worker flows," Finance and Economics Discussion Series 2004-34, Board of Governors of the Federal Reserve System (U.S.).
    14. Eran Yashiv, 2005. "Forward-Looking Hiring Behavior and the Dynamics of the Aggregate Labor Market," 2005 Meeting Papers 360, Society for Economic Dynamics.
    Full references (including those not matched with items on IDEAS)

    More about this item


    radio spectrum; spectrum trading; imperfect competition;

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sur:surrec:1107. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ioannis Lazopoulos). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.