3. The operator of a wireless transmitter must choose whether to operate at a ti

Question

3. The operator of a wireless transmitter must choose whether to operate at a time of day that might cause interference to a neighbor. Scenario A: Devices are in unlicensed spectrum operating under a coexistence model. Scenario B: Devices are in a band where all property rights proposed by De Vany (A. De Vany, R.D. Eckert, C.J. Meyers, D.J. O'Hara, and R.C. Scott, "A Property System for Market Allocation of the Electromagnetic Spectrum: A Legal-Economic-Engineering Study," 21 Stan. L. Rev. 1499 (1969). pp. 1505-1518) are in effect.

a. In each of these scenarios, answer the following questions.

i. Is there a potential market failure associated with this decision?

ii. If no, why not?

iii. If yes, why, and which kind of market failure? (Six possibilities were discussed in class.)

Explanation / Answer

In Scenario A,there is a possibility of market failure because its an illegal option to carry out the function and any illegal work can lead to market failure in future.There would be huge loss due the interference problem and the customer could complain against the service that is provided by the operator as a result there is huge risk of market failure in this option.

In Scenario B, there is no chance of market failure, because the operators are providing services under the norms of the regulatory societies and any mismanagement caused by the operators can be easily noticed and they would be charged with proper fine.This would lead to error free service to the customers and they would be happy and satisfied with the services and hence the market will prosper more in future.

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