Economics Dictionary of ArgumentsHome
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| Auctions: Auctions are public sales where goods or services are offered to the highest bidder. Various types exist, like ascending (English), descending (Dutch), or sealed-bid formats. Auctions are used in diverse industries, from art and real estate to online marketplaces, facilitating efficient price discovery and allocation of items. See also Markets, Price, Allocation._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Ronald Coase on Auctions - Dictionary of Arguments
Kiesling I 30 Auctions/spectrum allocation/Coase/Kiesling: „A private-enterprise system cannot function properly unless property rights are created in resources, and, when this is done, someone wishing to use a resource has to pay the owner to obtain it. Chaos disappears; and so does the government except that a legal system to define property rights and to arbitrate disputes is, of course, necessary.“ (1959(1): 14) Markets/Coase: Why use markets? Markets reveal the opportunity cost of the license and factor that opportunity cost into the decision-making of incumbent and entrant license holders. A right to use a frequency would have to be defined precisely in order to be transacted (Coase, 1959(1): 25). Kiesling I 31 Thirty-four years after Coase proposed using markets to allocate spectrum, Congress passed legislation allowing non-broadcast spectrum licenses to be allocated using auctions. Licenses for the most valuable bandwidth are “flexible use” licenses, where the specific use is not stipulated in the license. The FCC moved away from the lottery system and began spectrum license auctions in 1994. Each license was defined by a particular frequency and geographic location. As a result of the liberalization of property rights in the licenses and their allocation by auctions, market participants now determine how airwaves are used and how interference conflicts are managed. >Auctions/Economic theories. Kiesling I 32 Coase’s 1959 analysis did not delve into the particular details of auction theory or market design. Institutions/Coase: Rather, he provided a detailed institutional description and analysis of the existing license allocation method, identified the loss of economic welfare arising from that institutional arrangement, and asked the deceptively simple question: why not use markets to allocate use rights to different frequency bands in the spectrum? He argued that government planning of spectrum allocation was unnecessary, and that flexible rights issued to competitive market participants would be a better approach. Today: The digital world we inhabit today has been built in part on the innovation unleashed by competitive spectrum license auctions. 1. Coase, Ronald H. (1959). The Federal Communications Commission. Journal of Law and Economics 2: 1-40._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Coase, Ronald Kiesling I L. Lynne Kiesling The Essential Ronald Coase Vancouver: Fraser Institute. 2021 |
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