Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
Optimal Abolition of FCC Spectrum Allocation
Journal of Economic Perspectives
vol. 22,
no. 1, Winter 2008
(pp. 103–128)
(Complimentary)
Abstract
Ronald Coase based his 1959 call for spectrum markets on theoretical conjecture. Today abundant evidence supports his case. Targeted liberalization in cellular markets, as contrasted with regulatory planning of the digital TV transition and other traditional policies, suggest enormous efficiency gains are available from wider use of "the price system." With exclusive frequency rights assigned to owners, markets widely reconfigure spectrum use, coordinating complex spectrum sharing. Resulting social gains include increased consumer surplus from enhanced technological innovation and wireless service competition. A social bonus arrives in the benefits associated with wider scope for free speech. Yet, the administrative allocation system continues to distribute rents and garner political support. Liberal reforms, in contrast, produce large but broadly dispersed efficiency gains and are undersupplied. This paper proposes an incremental extension of property rights in spectrum to move beyond the current rent-seeking equilibrium, eliminating the Federal Communications Commission's centralized spectrum allocation process and, with it, an "attractive nuisance" generating anticonsumer outcomes.Citation
Hazlett, Thomas, W. 2008. "Optimal Abolition of FCC Spectrum Allocation." Journal of Economic Perspectives, 22 (1): 103–128. DOI: 10.1257/jep.22.1.103JEL Classification
- D23 Organizational Behavior; Transaction Costs; Property Rights
- H82 Governmental Property
- L82 Entertainment; Media
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