Implications of dynamic spectrum management for regulation

The Coase theorem suggests that a regulatory scheme, which clearly defines spectrum property rights and allows transactions between participants, induces an optimal spectrum assignment. This paper argues that the conditions required by Coase are gradually achieved by the introduction of Dynamic Spectrum Management (DSM), which enables a dynamic reassignment of spectrum bands at different times and places. DSM reduces the costs associated with spectrum transactions and thus provides an opportunity to enhance efficiency through voluntary transactions. This study analyzes the factors affecting the benefits of a regulatory scheme allowing transactions, compares and quantifies the potential gains associated with different spectrum regimes by employing agent-based simulations and suggests policy implications for spectrum regulation.