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| Publications [#266991] of Leslie M. Marx
Chapters in Books
- Marx, LM; Loerstcher, S, Economics and the Efficient Allocation of Spectrum Licenses,
in Mechanisms and Games for Dynamic Spectrum Access, edited by Alpcan, T; Boche, H; Honig, M; Poor, V, vol. 9781107034129
(2014),
pp. 552-578, Cambridge University Press, ISBN 9781107034129 [doi]
(last updated on 2026/01/14)
Abstract:
In this chapter, we discuss the economics literature underpinning the development of a market design approach for both primary and secondary markets for spectrum licenses and consider the practical implications for implementation. Introduction. The development of mobile wireless technologies for voice and data, and of the mechanisms used to allocate electromagnetic spectrum for those uses, provides an insightful case study into how markets work and why market design matters for social outcomes. This chapter introduces the key concepts and theorems from economic theory and illustrates them based on the historical development of mobile wireless services. Although there is much to be learned from the experiences of countries around the globe, given the prominent role that the US Federal Communications Commission (FCC) has played historically, we focus on the US experience. We show that under the assumption that buyers and sellers are privately informed about their valuations and costs, the distinction between primary markets and secondary markets is critical for what can be achieved with carefully designed allocation mechanisms, where by a primary market we mean a situation in which the seller (or possibly the buyer) of the assets also chooses the mechanism, and by a secondary market we mean a situation in which an entity other than a party to the transaction chooses the trading mechanism and organizes the exchange. The economics literature on mechanism design and auction theory has primarily focused on designing primary markets, notwithstanding a few notable exceptions such as [21, 39, 42, 52]. We review the literature on primary market design and show that for the primary market an efficient allocation mechanism that does not run a deficit exists. This is in stark contrast to the known results for secondary markets, according to which such mechanisms do not exist. Moreover, we derive a new result that generalizes these impossibility results to the case of heterogeneous objects and arbitrary quasilinear utility and profit functions.
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