NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Ownership Concentration and Strategic Supply Reduction

Ulrich Doraszelski, Katja Seim, Michael Sinkinson, Peichun Wang

NBER Working Paper No. 23034
Issued in January 2017
NBER Program(s):   IO

We explore the sensitivity of the U.S. government's ongoing incentive auction to multi-license ownership by broadcasters. We document significant broadcast TV license purchases by private equity firms prior to the auction and perform a prospective analysis of the effect of ownership concentration on auction outcomes. We find that multi-license holders are able to raise spectrum acquisition costs by 22% by strategically withholding some of their licenses to increase the price for their remaining licenses. We analyze a potential rule change that reduces the distortion in payouts to license holders by up to 80%, but find that lower participation could greatly increase payouts and exacerbate strategic effects.

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Document Object Identifier (DOI): 10.3386/w23034

 
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