Increasing Diversity in Telecommunications Ownership and Increasing Efficiency in Spectrum Auctions by Breaking the Link between Capital Market Discrimination and FCC Spectrum Auction Outcomes
In Section 309(j)4(D) of the Communications Act, the Federal Communications Commission (“FCC”) is required to increase opportunities for minority groups to participate in the provision of spectrum based services. In Adarand Construction, Inc. v. Pena, the Supreme Court held that race-based governmen...
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description | In Section 309(j)4(D) of the Communications Act, the Federal Communications Commission (“FCC”) is required to increase opportunities for minority groups to participate in the provision of spectrum based services. In Adarand Construction, Inc. v. Pena, the Supreme Court held that race-based government programs were subject to strict scrutiny. That is race-based programs must serve a compelling governmental interest such as remedying past discrimination, and must be narrowly tailored to serve that interest. Against this backdrop, a simple theoretical model is developed that explains the relationship between capital market discrimination and outcomes in FCC spectrum auctions. Given capital market discrimination and all other factors being equal, it is shown that a minority firm has zero probability of winning in an auction for spectrum. In addition, it is proven that, if equal bidding credits are given to all firms, if there is capital market discrimination, and if all other things are equal, the minority firm has a zero probability of winning in a spectrum auction. It is shown that a policy of auctioning spectrum, when there is capital market discrimination, is an inferior policy among policies that can be used to allocate spectrum. Finally, a policy of auctioning spectrum, when there is capital market discrimination, results in an inefficient auction. These theoretical results and the empirical literature on capital market discrimination suggest that the FCC is implicitly discriminating against minorities through its auctioning of spectrum under conditions of discrimination in capital markets. The results imply that race-based programs are necessary/justified in order to increase diversity in telecommunications ownership and increase the efficiency of FCC Spectrum Auctions. Given possible legal remedies, the paper contains a critical “audit”/analysis of the FCC's lending practices under the FCC's installment payments. Legislative proposals for creating some new form of credit/installment payment in conjunction with some experienced financial institution(s) are summarized and reviewed. |
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It is shown that a policy of auctioning spectrum, when there is capital market discrimination, is an inferior policy among policies that can be used to allocate spectrum. Finally, a policy of auctioning spectrum, when there is capital market discrimination, results in an inefficient auction. These theoretical results and the empirical literature on capital market discrimination suggest that the FCC is implicitly discriminating against minorities through its auctioning of spectrum under conditions of discrimination in capital markets. The results imply that race-based programs are necessary/justified in order to increase diversity in telecommunications ownership and increase the efficiency of FCC Spectrum Auctions. Given possible legal remedies, the paper contains a critical “audit”/analysis of the FCC's lending practices under the FCC's installment payments. Legislative proposals for creating some new form of credit/installment payment in conjunction with some experienced financial institution(s) are summarized and reviewed.</description><identifier>ISSN: 0034-6446</identifier><identifier>EISSN: 1936-4814</identifier><identifier>DOI: 10.1007/s12114-009-9049-z</identifier><identifier>CODEN: RBPEDE</identifier><language>eng</language><publisher>Los Angeles, CA: SAGE Publications</publisher><subject>Auction theory ; Auctions ; Bidding ; Capital market ; Capital markets ; Credit ; Cultural Pluralism ; Debt financing ; Discrimination ; Economic Policy ; Economics ; Economics and Finance ; Efficiency ; Finance ; Financial institutions ; Installment payments ; Interest rates ; Legislation ; Licenses ; Literature reviews ; Market entry ; Markets ; Multiculturalism & pluralism ; Ownership ; Payment systems ; Payments ; Political Science ; Proposals ; Racial discrimination ; Regulation ; Sociology ; Spectrum allocation ; Telecommunications ; U.S.A ; Variables</subject><ispartof>The Review of Black political economy, 2010-06, Vol.37 (2), p.131-152</ispartof><rights>2010 National Economic Association</rights><rights>Springer Science + Business Media, LLC 2009</rights><rights>Springer Science + Business Media, LLC 2010</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c428z-a283e94e576c337d3b332d9ff994bd605ba09d7706c2d9fb24e5d6372b89553d3</citedby><cites>FETCH-LOGICAL-c428z-a283e94e576c337d3b332d9ff994bd605ba09d7706c2d9fb24e5d6372b89553d3</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://journals.sagepub.com/doi/pdf/10.1007/s12114-009-9049-z$$EPDF$$P50$$Gsage$$H</linktopdf><linktohtml>$$Uhttps://journals.sagepub.com/doi/10.1007/s12114-009-9049-z$$EHTML$$P50$$Gsage$$H</linktohtml><link.rule.ids>314,780,784,12845,21819,27344,27924,27925,33774,33775,43621,43622</link.rule.ids></links><search><creatorcontrib>Bush, Clarence Anthony</creatorcontrib><title>Increasing Diversity in Telecommunications Ownership and Increasing Efficiency in Spectrum Auctions by Breaking the Link between Capital Market Discrimination and FCC Spectrum Auction Outcomes</title><title>The Review of Black political economy</title><addtitle>Rev Black Polit Econ</addtitle><description>In Section 309(j)4(D) of the Communications Act, the Federal Communications Commission (“FCC”) is required to increase opportunities for minority groups to participate in the provision of spectrum based services. 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It is shown that a policy of auctioning spectrum, when there is capital market discrimination, is an inferior policy among policies that can be used to allocate spectrum. Finally, a policy of auctioning spectrum, when there is capital market discrimination, results in an inefficient auction. These theoretical results and the empirical literature on capital market discrimination suggest that the FCC is implicitly discriminating against minorities through its auctioning of spectrum under conditions of discrimination in capital markets. The results imply that race-based programs are necessary/justified in order to increase diversity in telecommunications ownership and increase the efficiency of FCC Spectrum Auctions. Given possible legal remedies, the paper contains a critical “audit”/analysis of the FCC's lending practices under the FCC's installment payments. Legislative proposals for creating some new form of credit/installment payment in conjunction with some experienced financial institution(s) are summarized and reviewed.</description><subject>Auction theory</subject><subject>Auctions</subject><subject>Bidding</subject><subject>Capital market</subject><subject>Capital markets</subject><subject>Credit</subject><subject>Cultural Pluralism</subject><subject>Debt financing</subject><subject>Discrimination</subject><subject>Economic Policy</subject><subject>Economics</subject><subject>Economics and Finance</subject><subject>Efficiency</subject><subject>Finance</subject><subject>Financial institutions</subject><subject>Installment payments</subject><subject>Interest rates</subject><subject>Legislation</subject><subject>Licenses</subject><subject>Literature reviews</subject><subject>Market entry</subject><subject>Markets</subject><subject>Multiculturalism & pluralism</subject><subject>Ownership</subject><subject>Payment 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In Adarand Construction, Inc. v. Pena, the Supreme Court held that race-based government programs were subject to strict scrutiny. That is race-based programs must serve a compelling governmental interest such as remedying past discrimination, and must be narrowly tailored to serve that interest. Against this backdrop, a simple theoretical model is developed that explains the relationship between capital market discrimination and outcomes in FCC spectrum auctions. Given capital market discrimination and all other factors being equal, it is shown that a minority firm has zero probability of winning in an auction for spectrum. In addition, it is proven that, if equal bidding credits are given to all firms, if there is capital market discrimination, and if all other things are equal, the minority firm has a zero probability of winning in a spectrum auction. It is shown that a policy of auctioning spectrum, when there is capital market discrimination, is an inferior policy among policies that can be used to allocate spectrum. Finally, a policy of auctioning spectrum, when there is capital market discrimination, results in an inefficient auction. These theoretical results and the empirical literature on capital market discrimination suggest that the FCC is implicitly discriminating against minorities through its auctioning of spectrum under conditions of discrimination in capital markets. The results imply that race-based programs are necessary/justified in order to increase diversity in telecommunications ownership and increase the efficiency of FCC Spectrum Auctions. Given possible legal remedies, the paper contains a critical “audit”/analysis of the FCC's lending practices under the FCC's installment payments. Legislative proposals for creating some new form of credit/installment payment in conjunction with some experienced financial institution(s) are summarized and reviewed.</abstract><cop>Los Angeles, CA</cop><pub>SAGE Publications</pub><doi>10.1007/s12114-009-9049-z</doi><tpages>22</tpages></addata></record> |
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subjects | Auction theory Auctions Bidding Capital market Capital markets Credit Cultural Pluralism Debt financing Discrimination Economic Policy Economics Economics and Finance Efficiency Finance Financial institutions Installment payments Interest rates Legislation Licenses Literature reviews Market entry Markets Multiculturalism & pluralism Ownership Payment systems Payments Political Science Proposals Racial discrimination Regulation Sociology Spectrum allocation Telecommunications U.S.A Variables |
title | Increasing Diversity in Telecommunications Ownership and Increasing Efficiency in Spectrum Auctions by Breaking the Link between Capital Market Discrimination and FCC Spectrum Auction Outcomes |
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