FCC Staff Working Paper 4 (June 2012) examines possible alternatives to the current administrative process for identifying the efficient allocation of signal interference rights. It shows how the efficient allocation of such rights can arise from a multi-player game embedded into an auction where participants place bids reflecting the benefit or harm they would expect to incur due to signal interference.
The paper also considers how to identify the efficient set of interference rights, as well as the efficient licensee, for yet-to-be auctioned spectrum (e.g., Advanced Wireless Services-3). In both cases, the authors demonstrate that an efficient outcome requires market participants to select a particular Nash equilibrium from a possibly large set of equilibria, a process that also may require them to solve a “collective action” problem.