Transmitters and Receivers’ Investment to Avoid Interference: Is There an Optimal Regime?

29 Pages Posted: 3 May 2011

See all articles by Luigi A. Franzoni

Luigi A. Franzoni

University of Bologna

Pietro Crocioni

University of Warwick - Warwick Business School

Date Written: April 30, 2011

Abstract

The management of interference has been, and still is, the main concern in spectrum policy. Historically, interference has been dealt with by heavy regulation under an administrative control regime. Over the last decades, a new approach has been put forward based on users’ “property rights,” better able to cope with rapidly changing technological environment. The issue of how to deal with interference across bands, however, remains crucial: What obligations should be put on users so as to keep interference at a socially acceptable level? Also, given that some unwanted emissions are bound to occur, how can private parties be provided with the right incentives to invest in high-quality reception technology? This article assesses how well different regulatory regimes can lead to efficient outcomes. It develops an economic model of spectrum interference and identifies the efficient solution. A regime where spectrum users have the power to enjoin intruding emissions beyond a predefined level (“property rights protection”) is compared to a regime where users are forced to bear with intruding emissions, but are entitled to economic compensation for the harm suffered (“liability rules protection”). The analysis suggests that different regimes may perform differently under different circumstances depending on the cause of interference and, critically, on whether the services are organised as an open- or a close-architecture system. This suggests that regulators should pay more attention to the specific features of the different bands, and that the appropriate spectrum management regime should be designed to recognise these differences.

Keywords: spectrum policy, interference

JEL Classification: L51

Suggested Citation

Franzoni, Luigi Alberto and Crocioni, Pietro, Transmitters and Receivers’ Investment to Avoid Interference: Is There an Optimal Regime? (April 30, 2011). Available at SSRN: https://ssrn.com/abstract=1825806 or http://dx.doi.org/10.2139/ssrn.1825806

Luigi Alberto Franzoni (Contact Author)

University of Bologna ( email )

P.zza Scaravilli 2
Bologna, 40124
Italy
0512098488 (Phone)
+39-051-221968 (Fax)

HOME PAGE: https://www.unibo.it/sitoweb/luigi.franzoni/en

Pietro Crocioni

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
31
Abstract Views
704
PlumX Metrics