Royalties, entry, and spectrum allocation to the broadcasting industry

Michael Ralph Caputo, Benoit Pierre Freyens

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

We characterize the socially optimal trajectory of spectrum royalty and firm entry in a deregulated over-the-air broadcasting industry. A social planner maximizes consumers' lifetime utility by setting royalties for the use of publicly owned spectrum. As the number of broadcasters adjusts to profits over time, the quality of service improves through greater variety but also deteriorates through intensified interferences. Contrary to observed consolidation and return to concentration in past deregulatory reforms, we find that optimal royalty control that accounts for these quality effects steers the socially optimal trajectory of royalties and firms to a more competitive steady state.

Original languageEnglish
Pages (from-to)1081-1098
Number of pages18
JournalJournal of Public Economic Theory
Volume19
Issue number6
DOIs
Publication statusPublished - 1 Dec 2017

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