Working Paper No. 11-48:
What Really Matters in Spectrum Allocation Design

Author(s):

Thomas Hazlett, Roberto Muñoz, Diego Avanzini

Date Posted: November 2011

Availability:
Abstract (below)
Full text (original)   PDF file
Full text (most recent) on SSRN

Abstract:

Wireless license auctions have successfully replaced “beauty contests” in many countries. Competitive bidding (1) puts spectrum rights in the hands of the most productive firms; (2) reduces rent-seeking costs; and (3) captures license values for the public, potentially reducing costly tax distortions. Economists and policy makers have asymmetrically focused on (3). Yet, the overwhelming consumer welfare gains are produced in output (retail services) markets, not by extracting revenues from the sale of spectrum inputs. This fact leads to powerful policy implications, supporting liberal policies that permit market rivals to (quickly) access abundant bandwidth.