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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