Allocative vs. Productive Spectrum Efficiency

Achieving efficient spectrum management in the pursuit of the public interest is a key aspect of deregulatory reforms in several OECD countries. However, these reforms have proved surprisingly ambiguous about the nature of the efficiencies to be achieved. Spectrum law requires new licensing regimes to promote both allocative and productive efficiency. But which should prevail when these objectives exclude each other in practice? A convenient consensus is to target allocative efficiency for larger standardized services, and productive efficiency for tailored specialist services. In this article we show that adopting this criterion can still lead to a stalemate. We then present a simple economic model to prove the primacy of allocative efficiency in situations of conflicting objectives.