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Ownership Concentration and Strategic Supply Reduction

Ulrich Doraszelski, Katja Seim, Michael Sinkinson, Peichun Wang

NBER Working Paper No. 23034
Issued in January 2017, Revised in May 2019
NBER Program(s):The Industrial Organization Program

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%.

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Document Object Identifier (DOI): 10.3386/w23034

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