Spectrum policy and competition in mobile data

Gorm A. Grønnevet, Bjørn Hansen and Bjørn-Atle Reme

Information Economics and Policy, 2016, vol. 37, issue C, 34-41

Abstract: This paper studies the effects of radio spectrum sharing between two mobile operators within a Hotelling model of duopoly. We apply the M/M/1 queuing model to analyze the effect of mandated sharing of radio spectrum on the equilibrium connection quality, data volumes and prices. Our analysis shows that spectrum sharing can have adverse effects. First, it creates an incentive for the mobile operators to increase the load in their network in order to weaken the competitor. A higher network load leads to more network congestion and suboptimal equilibrium connection quality. Second, consumer surplus decreases and industry profit increases for a wide range of parameter values in the model. In other words, spectrum sharing could lead to a transfer from consumers to producers.

JEL-codes: L13 L51 L96 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:iepoli:v:37:y:2016:i:c:p:34-41

DOI: 10.1016/j.infoecopol.2016.07.003

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