Allocative vs technical spectrum efficiency

Benoit Freyens, Oleg Yerokhin

    Research output: Contribution to journalArticle

    11 Citations (Scopus)
    11 Downloads (Pure)

    Abstract

    Achieving allocative and technically efficient spectrum management is a key aspect of deregulatory reforms in several OECD countries. However, reform legislation offers few clues as to how these objectives should rank when they conflict with one another. An ‘innocent’ prior acquisition of service-neutral spectrum at an efficiently run auction may prove allocative efficient but fail to be technically efficient if the spectrum is left fallow in the short term. Accountability for the productive usage of a public resource and pressures from short-term political cycles may induce regulators to mandate some minimal level of activity. Two plausible regulatory responses are considered: use it or lose it clauses and spectrum trading incentives. The former favours technical efficiency whilst the latter promotes allocative efficiency. The argument is formalised in a simple economic model buttressing the roles of uncertainty and transaction costs to assert the primacy of allocative efficiency over technical efficiency
    Original languageEnglish
    Pages (from-to)291-300
    Number of pages10
    JournalTelecommunications Policy
    Volume35
    Issue number4
    DOIs
    Publication statusPublished - 2011

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