Coase and the New Zealand Spectrum Reforms

Coase Conference: Markets, Firms and Property Rights: A Celebration of the Research of Ronald Coase, University of Chicago Law School. Charles L. Jackson, Adjunct Professor of Electrical Engineering, George Washington University.

In 1989, New Zealand’s Parliament enacted a new statute, the Radiocommunications Act 1989, that explicitly used a system of property rights to regulate the use of the radio spectrum.1 This statute resulted in the first ever spectrum auctions—and New Zealand’s use of auctions has been copied around the globe. New Zealand’s adoption of a property rights regime, a more fundamental change than the introduction of spectrum auctions, has not had the same wide acceptance.2 How did New Zealand’s adoption of a property rights approach to spectrum come to pass? What role did Coase’s 1959 article play in the decision to adopt a property-rights approach and in the design of the property-rights mechanisms? How does the New Zealand system (both in theory and in practice) differ from a naïve application of Coase’s insights? It is my goal in this paper to address these questions. I was on the team that developed most of the system that is embodied in the New Zealand statute, and I participated in some of the drafting sessions for the statute.3 In recounting the background of the New Zealand project, I also have to describe Coase’s influence on my own thinking. Although I conclude that the spectrum rights regime in New Zealand reflects Coase’s insights and, most probably, would not exist without his work, I indulge in some speculation about the benefits of broader and earlier implementation of a property-rights approach to spectrum management.



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