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The effects of spectrum allocation mechanisms on market outcomes: Auctions vs beauty contests

Toshifumi Kuroda and Maria del Pilar Baquero Forero
Authors registered in the RePEc Author Service: 黒田敏史 ()

Telecommunications Policy, 2017, vol. 41, issue 5, 341-354

Abstract: This paper compares the evolution of seven key market outcomes in 47 countries after the allocation of mobile phone spectrum by auctions and beauty contests held from 2000 to 2008. Traditional auction theory predicts the merits of auction versus “beauty contests”. However, recent theoretical research shows that auctions impose selection and debt effects on the after-market competition that could harm consumers. We employ two semi-parametric estimators to determine the treatment effects and find that 3G mobile phone penetration rates among auctioning countries are 1.04–8.95% lower. Findings suggest that auctions, when used to raise public revenues, not only transfer profits to government but also sacrifice consumer surplus.

Keywords: 3G mobile diffusion; Beauty contests; Spectrum auctions; Treatment effects (search for similar items in EconPapers)
JEL-codes: D44 L10 L50 L96 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.telpol.2017.01.006

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