Optimal Control of Broadcasting Spectrum with Variety-Reception Trade-off and Consumers’ Income Sensitivity
This paper uses optimal control theory to derive a desirable trajectory of the number of royalties-paying users of state-owned spectrum for broadcasting. The spectrum royalties are set by the public planner to maximize the consumers’ utilities over an infinite planning horizon. The consumers’ utilities are generated from the quality of the service of the broadcasting industry, from the consumption of other goods, and from the public services financed by the spectrum royalties. The number of broadcasters adjusts to above-normal profits. The quality of the broadcasting industry’s service is determined by variety and reception. The trade-off between the benefits from higher variety and royalties’ revenues and the costs of intensified interferences associated with the number of broadcasters is considered. The positive information-dissemination effect and the negative effort-diversion effect of the quality of the broadcasting industry’s service on the consumers’ aggregate income are also considered. The possibility of convergence of the derived trajectory of the number of broadcasters to steady state and the comparative statics of the steady state are analyzed.
|Date of creation:||2012|
|Contact details of provider:|| Postal: School of Economics, University of Wollongong, Northfields Avenue, Wollongong NSW 2522 Australia|
Phone: +612 4221-3659
Fax: +612 4221-3725
Web page: http://business.uow.edu.au/econ/index.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Massimo Motta & Michele Polo, 1997. "Concentration and public policies in the broadcasting industry: the future of television," Economic Policy, CEPR;CES;MSH, vol. 12(25), pages 293-334, October.
- Thomas W. Hazlett, 2008. "Optimal Abolition of FCC Spectrum Allocation," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 103-128, Winter.
- Webbink, Douglas W, 1973. "Regulation, Profits and Entry in the Television Broadcasting Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 21(2), pages 167-176, April.
- Jérôme Adda & Marco Ottaviani, 2005. "The transition to digital television," Economic Policy, CEPR;CES;MSH, vol. 20(41), pages 160-209, 01.
When requesting a correction, please mention this item's handle: RePEc:uow:depec1:wp12-10. 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: (Peter Siminski)
If references are entirely missing, you can add them using this form.