Welfare Cost of Mobile Spectrum (Mis)allocation

30 Pages Posted: 29 Sep 2022 Last revised: 28 Nov 2022

See all articles by Julienne Liang

Julienne Liang

France Telecom

Jean-Baptiste Guiffard

Université Paris I Panthéon-Sorbonne - UMR 201 - Développement et Sociétés

Marc Ivaldi

Toulouse School of Economics; Centre for Economic Policy Research (CEPR)

Louise Aimene

Orange SA

Date Written: September 23, 2022

Abstract

Conditions under which spectrum is allocated are significant in determining the market structure in the telecom sector which in turn affects the prices and the quality of mobile services. In a more concentrated market, the quantity of spectrum is less diluted, and operators can offer higher quality to their customers; In a more competitive market, consumers can benefit from a lower price but at the expense of less quality for each operator. To address this trade-off, we first fit a demand model of mobile telecommunications services on a unique panel database of 23 European MNOs; we then conduct counterfactual simulations to measure the effect on consumer surplus of different schemes of spectrum allocation in Germany. Reallocating additional spectrum to three instead of four operators is consumer welfare improving as increasing prices is compensated by larger improvement in quality.

Keywords: spectrum allocation; network investment; market structure; investment and competition

JEL Classification: L40, L96, L11

Suggested Citation

Liang, Julienne and Guiffard, Jean-Baptiste and Ivaldi, Marc and Aimene, Louise, Welfare Cost of Mobile Spectrum (Mis)allocation (September 23, 2022). Available at SSRN: https://ssrn.com/abstract=4228058 or http://dx.doi.org/10.2139/ssrn.4228058

Julienne Liang (Contact Author)

France Telecom ( email )

France

Jean-Baptiste Guiffard

Université Paris I Panthéon-Sorbonne - UMR 201 - Développement et Sociétés

Paris
France

Marc Ivaldi

Toulouse School of Economics ( email )

Manufacture des Tabacs
21 Allee de Brienne bat. F
Toulouse Cedex, F-31000
France
+33 5 61 12 8592 (Phone)
+33 5 61 12 8637 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Louise Aimene

Orange SA

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