After calibrating an empirical model measuring the relationship between frequencies allocated to cellular service and retail prices, we find that the welfare cost of withholding spectrum via reserve prices likely exceeded public gains from the revenues raised in either Belgium or Greece. This is one frequently-encountered example of how policies prescribed for license assignments alter market structure. The problem arises when the auction analysis does not then incorporate attendant welfare effects. We offer a critique of analytical partitioning that is asymmetrically broached.
Our empirical analysis focuses on wireless telephone service in twenty-eight countries, of which nineteen employ auctions to assign licenses. After adjusting for cross-sectional differences in demand and supply, we find that larger quantities of spectrum, as well as more intense competitiveness (measured by the Herfindahl- Hirschman Index), are strongly associated with lower prices. We then use the coefficient estimates from our model to perform simulations quantifying retail market effects associated with various policy changes. In general, auction rules intended to increase license rent extraction by restricting spectrum access are not welfare-enhancing. Restricting the use of spectrum inputs is a relatively expensive way to raise public funds.
This paper is organized as follows. In Section II we describe our empirical model and report regression results. Section III uses these estimates to simulate welfare effects of policy choices made in the design of license auctions. Section IV offers a conclusion.
After calibrating an empirical model measuring the relationship between frequencies allocated to cellular service and retail prices, we find that the welfare cost of withholding spectrum via reserve prices likely exceeded public gains from the revenues raised in either Belgium or Greece. This is one frequently-encountered example of how policies prescribed for license assignments alter market structure. The problem arises when the auction analysis does not then incorporate attendant welfare effects. We offer a critique of analytical partitioning that is asymmetrically broached.Our empirical analysis focuses on wireless telephone service in twenty-eight countries, of which nineteen employ auctions to assign licenses. After adjusting for cross-sectional differences in demand and supply, we find that larger quantities of spectrum, as well as more intense competitiveness (measured by the Herfindahl- Hirschman Index), are strongly associated with lower prices. We then use the coefficient estimates from our model to perform simulations quantifying retail market effects associated with various policy changes. In general, auction rules intended to increase license rent extraction by restricting spectrum access are not welfare-enhancing. Restricting the use of spectrum inputs is a relatively expensive way to raise public funds.เอกสารนี้มีการจัดระเบียบดังนี้ ในส่วนที่สอง เราอธิบายการถดถอยของเรารายงานและรูปแบบเชิงประจักษ์ผล ส่วน III ใช้ประมาณการจำลองผลสวัสดิการของทางเลือกนโยบายในการออกแบบของการประมูลใบอนุญาต ส่วน IV มีข้อสรุป
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