The Swedish 3G Beauty Contest: A Beauty or a Beast?

摘要

With system-wide changes, as described in Chaps. 2, 10 and 14, market forms and institutional arrangements become vital issues in relation to Information and Communication Technologies' (ICTs) development. As in many other countries, Sweden has recently allocated licenses to the third generation (3G) of wireless telecommunication technology. However, in contrast to Britain, Germany, and Denmark, for example, a so-called beauty contest was used to earmark the rights. The motivation was that using criteria other than price in the portioning of rights would be to the advantage of both consumers and producers and speed up the infrastructure investments (National Post and Telecom Agency (PTS) 2000a). It remains to be seen if the objectives of the contest will be met. The decision to choose such a competition was subject to some political controversy, as representatives of especially bourgeoisie parties preferred a conventional auction (the Committee of Finance 2000).rnWhat is remarkable is that there was not much of economic analysis behind the decision to choose a beauty contest. Considering that the choice was between two ways of allocating rights to a scarce resource, the use of the radio spectrum, economists should have something to contribute. But surprisingly, they have not offered much. Theoretical underpinnings for the use of beauty contests seem to be lacking and the economic literature has very little to say. About the alternative, auctions, it has a lot to offer (see e.g. Klemperer 1999, 2002a).