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Abstract:

Purpose – This paper proposes to describe a model and the results of a simulation exercise used to compare welfare outcomes for four governance regimes that might be employed for wireless services: two spectrum ownership regimes and two open commons regimes. Aims also to examine practical implications for policy makers.

Design/methodology/approach – A formal economic model was constructed and computational techniques were employed to explore the welfare consequences of alternative applications of policy instruments.

Findings – For the model examined, the market does as well as can be expected from government in setting interference tolerance for both types of regimes. However, commons regimes always generate excessive entry. While the theoretical optimum achievable by government in an ownership regime exceeds predicted welfare for a commons regime, for most model specifications the difference is not too large and an ownership regime can easily under-perform a commons regime if imperfectly-informed policy makers set policy variables incorrectly.

Research limitations/implications – The necessity of using computational methods limits the generality of the findings.

Practical implications – The modeling approach and analysis identify critical tradeoffs that must be addressed by policy makers in designing spectrum governance institutions.

Originality/value – This analytical approach makes possible hitherto impossible, side-by-side performance comparisons for alternative governance regimes. The framework can be extended and generalized to other policy issues.

Keywords:

Communication technologies, Licensing, Radiofrequencies

Article Type:

Technical paper

Article URL:

http://www.emeraldinsight.com/10.1108/14636690610653617

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