nep-reg New Economics Papers
on Regulation
Issue of 2010‒05‒02
24 papers chosen by
Christian Calmes
Universite du Quebec en Outaouais

  1. The Global Crisis: Why Laisser-faire Hong Kong Prefers Regulation By Leo F. Goodstadt
  2. Insurance regulation and the credit crisis. What’s new? By Ferro, Gustavo
  3. The Procyclical Effects of Bank Capital Regulation By Repullo, R.; Suarez, J.
  4. Does Regulation of Built-In Security Reduce Crime? Evidence From a Natural Experiment By Vollaard, B.A.; Ours, J.C. van
  5. What do premiums paid for bank M&As reflect? The case of the European Union By Jens Hagendorff; Ignacio Hernando; María J. Nieto; Larry D. Wall
  6. Why (and how) to regulate Power Exchanges in the EU market integration context? By Leonardo Meeus
  7. The Lender of Last Resort: Liquidity Provision Versus the Possibility of Bail-out By Nijskens, R.G.M.; Eijffinger, S.C.W.
  8. The optimal industry structure in a vertically related market By Raffaele Fiocco
  9. A Corporate Governance Index: Convergence and Diversity of National Corporate Governance Regulations By Martynova, M.; Renneboog, L.D.R.
  10. Basel Core Principles and Bank Risk: Does Compliance Matter? By Enrica Detragiache; Asli Demirgüç-Kunt
  11. Regulatory Capital Charges for Too-Connected-to-Fail Institutions: A Practical Proposal By Jorge A. Chan-Lau
  12. The Global Crisis: Fatal Decisions - Four Case Studies in Financial Regulation By Leo F. Goodstadt
  13. Toward a zero carbon energy policy in Europe: Defining a feasible and viable solution. By Christopher Jones and Jean-Michel Glachant
  14. Optimal Market Design By Boone, J.; Goeree, J.K.
  15. Pollution Standards, Technology Investment and Fines for Non-Compliance By Arguedas, Carmen
  16. Regulatory instruments for deployment of clean energy technologies By Ignacio J. Pérez-Arriaga
  17. The Global Crisis: Why Regulators Resist Reforms By Leo F. Goodstadt
  18. The Inclusiveness of Exclusion By Paulo Barelli; Suren Basov; Mauricio Bugarin; Ian King
  19. Crisis Management and Resolution for a European Banking System By Alessandro Giustiniani; Wim Fonteyne; Wouter Bossu; Alessandro Gullo; Sean Kerr; Daniel C. L. Hardy; Luis Cortavarria
  20. Collateral, Netting and Systemic Risk in the OTC Derivatives Market By Manmohan Singh
  21. The Interaction of Entrepreneurship and Institutions By Henrekson, Magnus; Sanandaji, Tino
  22. Credit Ratings and Bank Monitoring Ability By Nakamura, L.I.; Roszbach, K.
  23. Employment Protection, Technology Choice, and Worker Allocation By Bartelsman, Eric; Gautier, Pieter; De Wind, Joris

  1. By: Leo F. Goodstadt (Hong Kong Institute for Monetary Research ,Trinity College, University of Dublin ,The University of Hong Kong)
    Abstract: This paper explains why, despite the anti-Keynesian convictions of officials and academics, Hong Kong abandoned its initial commitment to the concepts of virtuous markets and moral hazard and resisted importing the prevailing Anglo-American regulatory ¡¥culture¡¦. It reviews foreign attacks on the government¡¦s intervention to protect financial markets during global crises and shows that these critics have misunderstood the limits of Hong Kong¡¦s attachment to laisser faire. The analysis traces the process by which increasingly strict regulation has been introduced without hindering the expansion of Hong Kong¡¦s role as a major international financial centre.
    Keywords: Laisser Faire, Autonomy, Regulation, Competition, Moral Hazard, Virtuous Markets, United States, United Kingdom
    Date: 2010–01
  2. By: Ferro, Gustavo
    Abstract: Prior to the 2008 global credit crisis, some developments had occurred in the regulation of the insurance industry worldwide. At different speeds, the world was heading toward a more risk-based solvency regulation and some convergence on principles and criteria. We see a common thread in the present discussion and in the way events happened. We consider that the great debate in the industry is a fundamental decision: whether to engage in other than core business activities. If the industry focuses on its insurance business, the argument for specialized regulation and the continuity of a conservative and prudent line of business is strong. Instead, if the industry deepens its identification with other lines of financial business, the specialized supervision arrangement does not hold. The move entails both possibilities of new, riskier and promising business, but also perils, since the industry “buys” the systemic characteristics that distinguish other financial institutions.
    Keywords: regulation; insurance; financial crisis; integrated supervision; financial conglomerates
    JEL: L51 G22
    Date: 2010–02
  3. By: Repullo, R.; Suarez, J. (Tilburg University, Center for Economic Research)
    Abstract: We assess the procyclical effects of bank capital regulation in a dynamic equilibrium model of relationship lending in which banks are unable to access the equity markets every period. Banks anticipate that shocks to their earnings as well as the cyclical position of the economy can impair their capacity to lend in the future and, as a precaution, hold capital buffers. We find that under cyclically-varying risk-based capital requirements (e.g. Basel II) banks hold larger buffers in expansions than in recessions. Yet, these buffers are insufficient to prevent a significant contraction in the supply of credit at the arrival of a recession. We show that cyclical adjustments in the confidence level underlying Basel II can reduce its procyclical effects on the supply of credit without compromising banks’ long-run solvency targets.
    Keywords: Banking regulation;Basel II;Business cycles;Capital requirements;Credit crunch;Loan defaults;Relationship banking.
    JEL: G21 G28 E44
    Date: 2010
  4. By: Vollaard, B.A.; Ours, J.C. van (Tilburg University, Center for Economic Research)
    Abstract: As of 1999, all new-built homes in the Netherlands have to have burglary-proof windows and doors. We provide evidence that this large-scale government intervention in the use of self-protective measures lowers crime and improves social welfare. We find the regulatory change to have reduced burglary in new-built homes from 1.1 to 0.8 percent annually, a reduction of 26 percent. The findings suggest that burglars avoid old, less-protected homes that are located in the direct vicinity of the new, better-protected homes. The presence of a negative externality on older homes is ambiguous. We find no evidence for displacement to other property crimes including theft from cars and bicycle theft. Even though the regulation of built-in security does not target preventative measures at homes that are most at risk, the social benefits of the regulation are likely to exceed the social costs.
    Keywords: victim precaution;government regulation;crime
    JEL: K42 H11 H23
    Date: 2010
  5. By: Jens Hagendorff (University of Leeds); Ignacio Hernando (Banco de España); María J. Nieto (Banco de España); Larry D. Wall (Federal Reserve Bank of Atlanta)
    Abstract: We analyze the takeover premiums paid for a sample of European bank mergers between 1997 and 2007. We find that acquiring banks value profitable, high-growth and low risk targets. We also find that the strength of bank regulation and supervision as well as deposit insurance regimes in Europe have measurable effects on takeover pricing. Stricter bank regulatory regimes and stronger deposit insurance schemes lower the takeover premiums paid by acquiring banks. This result, presumably in anticipation of higher compliance costs, is mainly driven by domestic deals. Also, we find no conclusive evidence that bidders seek to extract benefits from regulators either by paying a premium for deals in less regulated regimes or by becoming "too big to fail".
    Keywords: banks, mergers, premiums, European Union
    JEL: G21 G34 G28
    Date: 2010–04
  6. By: Leonardo Meeus
    Abstract: Power Exchanges (PXs) are key market institutions in open and market-based electricity industries. This paper aims at contributing to the ongoing debate on why and how to regulate Power Exchanges in the EU market integration context. . The paper starts by stating that two different types of PXs have to be distinguished, i.e. "Merchant" PXs and the "Cost of Service Regulated" PXs. The paper continues by comparing the typical incentives of these two types of PXs to perform the basic PX tasks in an isolated national market and in a market integration context. The paper concludes by deriving from this analytical frame the most relevant regulatory actions..
    Keywords: Regulation, Exchanges, Grid access, Power Markets.
    Date: 2010–01–29
  7. By: Nijskens, R.G.M.; Eijffinger, S.C.W. (Tilburg University, Center for Economic Research)
    Abstract: Banking regulation has proven to be inadequate to guard systemic stability in the recent financial crisis. Central banks have provided liquidity and ministries of finance have set up rescue programmes to restore confidence and stability. Using a model of a systemic bank suffering from liquidity shocks, we find that the unregulated bank keeps too much liquidity and takes excessive risk compared to the social optimum. A Lender of Last Resort can alleviate the liquidity problem, but induces moral hazard. Therefore, we introduce a fiscal authority that is able to bail out the bank by injecting capital. This authority faces a trade-off: when it imposes strict bailout conditions, investment increases but moral hazard ensues. Milder bailout conditions reduce excessive risk taking at the expense of investment. This resembles the current situation on financial markets, in which banks take less risk but also provide less credit to the economy.
    Keywords: Bank Regulation;Lender of Last Resort;Liquidity;Capital;Bailout
    JEL: E58 G21 G28
    Date: 2010
  8. By: Raffaele Fiocco
    Abstract: We consider a vertically related market characterized by down- stream imperfect competition and by the monopolistic provision of an essential facility-based input, whose price is set by a social-welfare maximizing regulator. Our model shows that the regulatory knowl- edge about the cost for providing the monopolistic input crucially af- fects the design of the optimal industry structure. In particular, we compare ownership separation, which prevents a single company from having the control of both upstream and downstream operations, and legal separation, under which these activities are legally unbundled but common ownership is allowed. As long as the regulator has full infor- mation, the two industry patterns yield the same social welfare level. However, under asymmetric information about the input costs legal separation can make the whole society better off.
    Keywords: access charge, legal separation, ownership separation, regulation
    JEL: D82 L11 L51
    Date: 2010–04
  9. By: Martynova, M.; Renneboog, L.D.R. (Tilburg University, Center for Economic Research)
    Abstract: The issue of appropriate corporate governance framework has been a focal point of recent reforms in many countries. This study provides a comprehensive comparative analysis of corporate governance regulatory systems and their evolution over the last 15 years in 30 European countries and the US. It proposes a methodology to create detailed corporate governance indices which capture the major features of capital market laws in the analysed countries. The indices indicate how the law in each country addresses various potential agency conflicts between corporate constituencies: namely, between shareholder and managers, between majority and minority shareholders, and between shareholders and bondholders. The analysis of regulatory provisions within the suggested framework enables us to understand better how corporate law works in a particular country and which strategies regulators adopt to achieve their goals. The 15-year time series of constructed indices and large country-coverage (30 European countries and the US) also allows us to draw conclusions about the convergence of corporate governance regimes across the countries. To our best knowledge, this is the first study that intends to address the convergence debate empirically. The analysis is based on a unique corporate governance database that comprises the main changes in corporate governance regulations in the US and all European countries between 1990-2005.
    Keywords: governance regulation;convergence;corporate governance;agency problem;ownership and control;LLSV
    JEL: G3 G34 G38 K2 K22 K40 G32
    Date: 2010
  10. By: Enrica Detragiache; Asli Demirgüç-Kunt
    Abstract: This paper studies whether compliance with the Basel Core Principles for effective banking supervision (BCPs) is associated with bank soundness. Using data for over 3,000 banks in 86countries, we find that neither the overall index of BCP compliance nor its individual components are robustly associated with bank risk measured by Z-scores. We also fail to find a relationship between BCP compliance and systemic risk measured by a system-wide Zscore.
    Keywords: Bank reforms , Bank regulations , Bank soundness , Bank supervision , Banks , Basel Core Principles , Credit risk , Cross country analysis , Financial risk ,
    Date: 2010–03–29
  11. By: Jorge A. Chan-Lau
    Abstract: The recent financial crisis has highlighted once more that interconnectedness in the financial system is a major source of systemic risk. I suggest a practical way to levy regulatory capital charges based on the degree of interconnectedness among financial institutions. Namely, the charges are based on the institution’s incremental contribution to systemic risk. The imposition of such capital charges could go a long way towards internalizing the negative externalities associated with too-connected-to-fail institutions and providing managerial incentives to strengthen an institution’s solvency position, and avoid too much homogeneity and excessive reliance on the same counterparties in the financial industry.
    Keywords: Bank regulations , Banking sector , Capital , Credit risk , Financial crisis , Financial institutions , Financial risk , Financial stability , Global Financial Crisis 2008-2009 , Globalization , International financial system ,
    Date: 2010–04–09
  12. By: Leo F. Goodstadt (Hong Kong Institute for Monetary Research, Trinity College, University of Dublin, The University of Hong Kong)
    Abstract: This paper uses four case studies to review the performance of the Anglo-American regulatory ¡¥culture¡¦. In the decade before the global financial crisis, American and British officials were almost identical in their analysis of and non-interventionist responses to identified threats from changing financial conditions in Asia; dependence of new financial products on the insurance industry; shortcomings of the rating agencies; and excesses in their property markets. They now acknowledge these past policy errors but continue to resist consumer protection and other reform initiatives.
    Keywords: Asia, China, Derivatives, Insurance, Credit Ratings, Property, Consumer Protection
    Date: 2009–11
  13. By: Christopher Jones and Jean-Michel Glachant
    Abstract: Reducing the European Union GHG emissions by at least 80% by 2050 will require a near zero carbon electricity, road and rail transport industry, and heating and cooling in buildings. As compared to "business as usual" the amount of energy required will basically vary according to the level of energy efficiency: it is the "system scale". Then it is the "system design" which will provide the needed carbon-free technologies consisting of renewable, nuclear and fossil fuels with carbon capture and storage. . A zero carbon energy system by 2050 is then demonstrated to be feasible. However it is far from easy and requires immediate and substantial policy action. The main policy implications are addressed in this paper. The 5 years 2010-2015 will be decisive in establishing a regulatory environment whereby the EU will be in a position, by 2020, to take the next steps to achieve the 2050 goal..
    Keywords: EU Energy Policy; Emission Rights; Carbon free electricity production; regulation of electricity industry
    Date: 2010–01–29
  14. By: Boone, J.; Goeree, J.K. (Tilburg University, Center for Economic Research)
    Abstract: This paper introduces three methodological advances to study the optimal design of static and dynamic markets. First, we apply a mechanism design approach to characterize all incentive-compatible market equilibria. Second, we conduct a normative analysis, i.e. we evaluate alternative competition and innovation policies from a welfare perspective. Third, we introduce a reliable way to measure competition in dynamic markets with nonlinear pricing. We illustrate the usefulness of our approach in several ways. We reproduce the empirical finding that innovation levels are higher in markets with lower price-cost margins, yet such markets are not necessarily more competitive. Indeed, we prove the Schumpeterian conjecture that more dynamic markets characterized by higher levels of innovation should be less competitive. Furthermore, we demonstrate how our approach can be used to determine the optimal combination of market regulation and innovation policies such as R&D subsidies or a weakening of the patent system. Finally, we show that optimal markets are characterized by strictly positive price-cost margins.
    Keywords: competition policy;dynamic markets;competition measures;Schumpeter;mechanism design
    JEL: K21 L40 O31
    Date: 2010
  15. By: Arguedas, Carmen (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)
    Abstract: In this paper, we analyze whether it is socially desirable that fines for exceeding pollution standards depend not only on the degree of non-compliance but also on the firm's level of investment in environmentally friendly technologies. For that purpose, we consider a partial equilibrium framework where a representative firm chooses the pollution level and the investment effort in response to an environmental policy composed of a pollution standard, an inspection probability and a fine for non-compliance. We find that the fine should not depend on the firm's investment effort if the optimal policy induces compliance. However, the fine should strictly decrease with investment effort under non-compliance and positive social costs of sanctioning. Interestingly, the optimal fine considers the relative importance of monitoring and sanctioning costs in the enforcement problem.
    Keywords: pollution standards; costly inspections; environmentally friendly technologies; non-compliance; optimal fines.
    JEL: K32 K42 L51 Q28
    Date: 2010–04
  16. By: Ignacio J. Pérez-Arriaga
    Abstract: Answering to the formidable challenge of climate change calls for a quick transition to a future economy with a drastic reduction in GHG emissions. And this in turn requires the development and massive deployment of new low-carbon energy technologies as soon as possible. Although many of these technologies have been identified, the critical issue is how to make them happen at the global level, possibly by integrating this effort into a global climate regime. This paper discusses the preferred approaches to foster low-carbon energy technologies from a regulatory point of view. Specific promotion policies for energy efficiency and conservation, renewable energy, carbon capture and sequestration, and nuclear power are examined, but the focus is on the regulatory instruments that will be needed for the deployment of enhancements to electricity grids and the associated control systems so that they are able to integrate intelligent demand response, distributed generation and storage in an efficient, reliable & environmentally responsible manner. The paper also comments on the interactions between technology and climate change policies and provides recommendations for policy makers.
    Keywords: Climate Change, Low-Carbon Energy Technologies, Regulatory Instruments, Smart Grids
    Date: 2010–01–29
  17. By: Leo F. Goodstadt (Hong Kong Institute for Monetary Research, Trinity College, University of Dublin, The University of Hong Kong)
    Abstract: An Anglo-American regulatory ¡¥culture¡¦ became associated with 30 years of worldwide economic reforms, global growth and monetary stability. American and British officials identified major sources of instability in their own financial markets before 2007 but remained non-interventionist, invoking the concepts of virtuous markets and moral hazard. They also ignored the policy defects revealed by past crises. Despite record banking losses and fiscal imbalances during the global crisis, their current resistance to regulatory reforms is supported by a powerful political and business consensus.
    Keywords: Non-Interventionism, Basel, Virtuous Markets, Moral Hazard, Regulatory Culture
    Date: 2009–11
  18. By: Paulo Barelli; Suren Basov; Mauricio Bugarin; Ian King
    Abstract: We extend Armstrong’s (1996) result on exclusion in multi-dimensional screening models in two key ways, providing support for the view that this result is quite generic and applicable to many different markets. First, we relax the strong technical assumptions he imposed on preferences and consumer types. Second, we extend the result beyond the monopolistic market structure to generalized oligopoly settings with entry. We also analyse applications to several quite different settings: credit markets, automobile industry, research grants, the regulation of a monopolist with unknown demand and cost functions, and involuntary unemployment in the labor market.
    Keywords: Multidimensional screening; exclusion; regulation of amonopoly; involuntary unemployment
    JEL: C73 D82
    Date: 2010
  19. By: Alessandro Giustiniani; Wim Fonteyne; Wouter Bossu; Alessandro Gullo; Sean Kerr; Daniel C. L. Hardy; Luis Cortavarria
    Abstract: This paper proposes an integrated crisis management and resolution framework for the EU's single banking market. It comprises a European Resolution Authority (ERA), armed with the mandate and the tools to deal cost-effectively with failing systemic cross-border banks, and is designed to address many fundamental operational and incentive problems. It also seeks to reduce moral hazard and better protect countries against the risk of twin fiscal-financial crises by detaching banks from government budgets. The ERA would be most effective if it were twinned or combined with a European Deposit Insurance and Resolution Fund.
    Keywords: Bank reforms , Bank resolution , Bank supervision , Banking crisis , Banking systems , Economic integration , European Monetary System , Financial crisis , Financial stability , Global Financial Crisis 2008-2009 , Risk management ,
    Date: 2010–03–19
  20. By: Manmohan Singh
    Abstract: To mitigate systemic risk, some regulators have advocated the greater use of centralized counterparties (CCPs) to clear Over-The-Counter (OTC) derivatives trades. Regulators should be cognizant that large banks active in the OTC derivatives market do not hold collateral against all the positions in their trading book and the paper proves an estimate of this under-collateralization. Whatever collateral is held by banks is allowed to be rehypothecated (or re-used) to others. Since CCPs would require all positions to have collateral against them, off-loading a significant portion of OTC derivatives transactions to central counterparties (CCPs) would require large increases in posted collateral, possibly requiring large banks to raise more capital. These costs suggest that most large banks will be reluctant to offload their positions to CCPs, and the paper proposes an appropriate capital levy on remaining positions to encourage the transition.
    Keywords: Asset management , Banks , Capital , Capital markets , Credit risk , Financial institutions , Financial instruments , Financial risk , Securities regulations ,
    Date: 2010–04–09
  21. By: Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Sanandaji, Tino (Research Institute of Industrial Economics (IFN))
    Abstract: Previous research, notably Baumol (1990), has highlighted the role of insti-tutions in channeling entrepreneurial supply into productive, unproductive or destructive activities. However, entrepreneurship is not only influenced by institutions—entrepreneurs often help shape institutions themselves. The bilateral causal relation between entrepreneurs and institutions is examined in this paper. Entrepreneurs affect institutions in at least three ways. Entrepreneurship abiding by existing institutions is occasionally disruptive enough to challenge the foundations of prevailing institutions. Entrepreneurs sometimes have the opportunity to evade institutions, which tends to undermine the effectiveness of the institutions, or cause institutions to change for the better. Lastly, entrepreneurs can directly alter institutions through innovative political entrepreneurship. As business entrepreneurship, innovative political activity may be productive or unproductive, depending on the incentives facing entrepreneurs.
    Keywords: Entrepreneurship; Innovation; Institutions; Regulation; Self-employment
    JEL: L50 M13 O31 P14
    Date: 2010–04–19
  22. By: Nakamura, L.I.; Roszbach, K. (Tilburg University, Center for Economic Research)
    Abstract: In this paper we use credit rating data from two Swedish banks to elicit evidence on these banks’ loan monitoring ability. We do so by comparing the ability of bank ratings to predict loan defaults relative to that of public ratings from the Swedish credit bureau. We test the banks’ abilility to forecast the credit bureau’s ratings and vice versa. We show that one of the banks has a superior predictive ability relative to the credit bureau. This is evidence that bank credit ratings do contain valuable private information and suggests they may be be a reasonable basis for risk management. However, public ratings are also found to have predictive ability for future bank ratings, indicating that risk analysis should be based on both public and bank ratings. The methods we use represent a new basket of straightforward techniques that enable both financial institutions and regulators to assess the performance of credit ratings systems.
    Keywords: Monitoring;banks;credit bureau;private information;ratings;regulation;supervision.
    JEL: D82 G18 G21 G24 G32 G33
    Date: 2010
  23. By: Bartelsman, Eric (VU University Amsterdam); Gautier, Pieter (VU University Amsterdam); De Wind, Joris (VU University Amsterdam)
    Abstract: Using a country-industry panel dataset (EUKLEMS) we uncover a robust empirical regularity, namely that high-risk innovative sectors are relatively smaller in countries with strict employment protection legislation (EPL). To understand the mechanism, we develop a two-sector matching model where firms endogenously choose between a safe technology with known productivity and a risky technology with productivity subject to sizeable shocks. Strict EPL makes the risky technology relatively less attractive because it is more costly to shed workers upon receiving a low productivity draw. We calibrate the model using a variety of aggregate, industry and micro-level data sources. We then simulate the model to reflect both the observed differences across countries in EPL and the observed increase since the mid-1990s in the variance of firm performance associated with the adoption of information and communication technology. The simulations produce a differential response to the arrival of risky technology between low- and high-EPL countries that coincides with the findings in the data. The described mechanism can explain a considerable portion of the slowdown in productivity in the EU relative to the US since 1995.
    Keywords: employment protection legislation, exit costs, information and communications technology, heterogeneous productivity, sectoral allocation
    JEL: J65 O38
    Date: 2010–04
  24. By: Thomas Hazlett (School of Law, George Mason University); David Porter (Economic Science Institute, CHapman University); Vernon L. Smith (Economic Science Institute, Chapman University)
    Abstract: In the Federal Communications Commission, Ronald Coase exposed deep foundations via normative argument buttressed by astute historical observation. The government controlled scarce frequencies, issuing sharply limited use rights. Spillovers were said to be otherwise endemic. Coase saw that Government limited conflicts by restricting uses; property owners perform an analogous function via the “price system.” The government solution was inefficient unless the net benefits of the alternative property regime were lower. Coase augured that the price system would outperform. His spectrum auction proposal was mocked by communications policy experts, opposed by industry interests, and ridiculed by policy makers. Hence, it took until July 25, 1994 for FCC license sales to commence. Today, some 73 U.S. auctions have been held, 27,484 licenses sold, and $52.6 billion paid. The reform is a textbook example of economic policy success. We examine Coase’s seminal 1959 paper on two levels. First, we note the importance of its analytical symmetry, comparing administrative to market mechanisms under the assumption of positive transaction costs. This fundamental insight has had enormous influence within the economics profession, yet is often lost in current analyses. This analytical insight had its beginning in his acclaimed early article on the firm,6 and continued into his subsequent treatment of social cost. Second, we investigate why spectrum policies have stopped well short of the property rights regime that Coase advocated, considering rent-seeking dynamics and the emergence of new theories challenging Coase’s property framework. One conclusion is easily rendered: competitive bidding is now the default tool in wireless license awards. By rule of thumb, about $17 billion in U.S. welfare losses have been averted. Not bad for the first 50 years of this, or any, Article appearing in Volume II of the Journal of Law & Economics.
    Date: 2009–11

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