A Transaction Cost Analysis of Secondary vs. Unlicensed Spectrum Use
17 Pages Posted: 11 Jul 2012
Date Written: August 15, 2006
The development of secondary spectrum access raises numerous technical, institutional, and economic issues. Transaction costs of the market mechanism and potential interference from spectrum sharing are among the issues of concern. Both transaction costs and uncertainty due to interference must be reasonable for secondary spectrum use to become practical.
The focus of this paper is to study trade-offs between using the market mechanism of secondary spectrum use and the non-market mechanism of unlicensed spectrum access. If the transaction costs of secondary use are relatively high, then allocating additional spectrum for unlicensed use may be more desirable. The expansion of unlicensed access, however, may be appropriate only in certain circumstances. We show that the additional unlicensed spectrum is highly beneficial to spectrum users with small coverage area in a high density setting, whereas the secondary spectrum use is a preferred method for spectrum users with large coverage area and rigid application requirements.
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