Spectrum Management: Property Rights, Markets and the Commons

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While both economists and radio engineers believe the present system of spectrum allocation is inefficient and wasteful, they appear to have diametrically opposed views of what should replace it. Economists seek to unleash the power of the market to achieve efficient outcomes; engineers seek to unleash the power of the commons to achieve efficient outcomes. Which is right? We argue in this paper that this is a false dichotomy. We propose a legal regime rooted in property rights that can simultaneously support both private markets and a commons that can accommodate the rapid diffusion of the new radio technologies, leading to a far more efficient allocation of this important and limited national resource.

By Gerald Faulhaber and David Farber, University of Pennsylvania. Published December 2002.

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