June 2008 -- The provocative Article by Phil Weiser and Dale Hatfield1 presents a challenging analysis of property rights to radio spectrum. Its main thesis is that a property system, by which they mean a private property regime, is difficult to construct because the rights are complicated to design.2 Radio emissions lurch in many dimensions and are hard to predict; they are prob-abilistic rather than precise.3 Weiser & Hatfield argue that this complexity has been ignored by advocates of private property, who reflexively cite property rights in land as the relevant analogy.4 It is a poor analogy, Weiser & Hatfield offer. Defining land is simple, defining spectrum is not simple, and the metaphor leads to an incomplete and potentially dangerous argu-ment for a premature shift to a rights structure that may harm the economy.5 Before markets are unleashed, spectrum ownership rights must be made complete and defined with certainty else we risk making public policy even less supportive of productive activity than it is under the present system of administrative allocation.6
Here I present a law and economics analysis that is distinctively dif-ferent. Happily, it largely dovetails with the Weiser & Hatfield public pol-icy position. Both approaches aim to facilitate a rights regime that enables markets to allocate radio spectrum, abandoning the traditional regime in place since 1927, wherein administrative allocation decides how to use the spectrum resource.7
Law and economics informs this policy exercise in fundamental ways. A wide array of models illuminates the key legal, political, and economic forces that interact to create property rights, and how those regimes evolve over time. These analyses hold important lessons for those dealing with the regulation of radio spectrum. In fact, the earliest property rights analogies drawn by regulators—to general common law rights of first appropriation8 and specifically to those found in riparian claims9—were crucial in organiz-ing economic activities in the dawn of the wireless era. In modern times, regulatory reforms establishing de jure or de facto private ownership of radio spectrum itself have yielded numerous insights as to the costs of effi-ciency-creating transactions under alternative rules. These examples consti-tute not metaphors, of course, but practical experience, ongoing tests of how liberal spectrum property regimes operate. They include the operation of cellular networks utilizing broadly defined, de facto spectrum ownership rights,10 and the emergence of reforms in countries that have explicitly adopted a “property rights” model for radio spectrum.11
Citation
"A Law & Economics Approach to Spectrum Property Rights: A Response to Professors Weiser & Hatfield" by Thomas W. Hazlett, 15 George Mason Law Review 975-1023 (June 2008), a response to "Spectrum Policy Reform and the Next Frontier of Property Rights" by Philip J. Weiser & Dale Hatfield, 15 George Mason Law Review 549-609 (Spring 2008), Quick Links: Thomas Hazlett
Related Scholarship
"A Rejoinder to Weiser and Hatfield on Spectrum Rights" by
Thomas W. Hazlett, 15 George Mason Law Review 1031-39 (June 2008), a rejoinder to: "Property Rights in Spectrum: A Reply to Hazlett" by Philip J. Weiser & Dale Hatfield, 15 George Mason Law Review 1025-30 (June 2008), Quick Links: Thomas Hazlett
"Tragedy T.V.: Rights Fragmentation and the Junk Band Problem" by Thomas Hazlett, October 2, 2009 (forthcoming publication Spring 2010), Quick Links: Gridlock Economy Conference
"U.S. Wireless License Auctions: 1994-2009" by Thomas Hazlett, ACCC Conference in Brisbane, Australia, July 14, 2009, Quick Links: Thomas Hazlett"
A Welfare Analysis of Spectrum Allocation Policies” by Thomas W. Hazlett & Roberto E. Muñoz, 40 RAND Journal of Economics 424 - 454 (2009), Quick Links: Thomas Hazlett, Roberto E. Muñoz
"Property Rights and Wireless License Values" by Thomas W. Hazlett, 51 Journal of Law and Economics 563-98 (August 2008), Quick Links: Thomas Hazlett
"Optimal Abolition of FCC Spectrum Allocation" by
Thomas W. Hazlett, 22 Journal of Economic Perspectives 103-28 (Winter 2008), Quick Links: Thomas Hazlett
