Ownership Concentration and Strategic Supply Reduction

Ulrich Doraszelski, ,, Michael Sinkinson and Peichun Wang

No 11173, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We explore the implications of ownership concentration for the recently-concluded incentive auction that re-purposed spectrum from broadcast TV to mobile broadband usage in the U.S. We document significant multi-license ownership of TV stations. We show that in the reverse auction, in which TV stations bid to relinquish their licenses, multi-license owners have an incentive to withhold some TV stations to drive up prices for their remaining TV stations. Using a large-scale valuation exercise, we find that this strategic supply reduction conservatively increases payouts to TV stations by between 7.0% and 20.7%.

Date: 2016-03
New Economics Papers: this item is included in nep-com and nep-reg
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