Ownership Concentration and Strategic Supply Reduction

Doraszelski, Ulrich; Seim, Katja; Sinkinson, Michael; Wang, Will

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Ownership Concentration and Strategic Supply Reduction

CEPR Discussion Paper No. DP11173

73 Pages Posted: 18 Apr 2016 Last revised: 7 May 2019

See all articles by Ulrich Doraszelski

Ulrich Doraszelski

Harvard University - Department of Economics; University of Pennsylvania - Business & Public Policy Department

Will Wang

University of Pennsylvania - The Wharton School

There are 2 versions of this paper

Date Written: March 2016

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%.

Suggested Citation: Suggested Citation

Doraszelski, Ulrich and Seim, Katja and Sinkinson, Michael and Wang, Peichun, Ownership Concentration and Strategic Supply Reduction (March 2016). CEPR Discussion Paper No. DP11173, Available at SSRN: https://ssrn.com/abstract=2766468