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Category Archives: K

Evaluation of the Impact of New Rules in FCC’s Spectrum Incentive Auction

By Elizabeth Lim, Akshaya Trivedi and Frances Mitchell

On March 29, 2016, the FCC initiated its first ever two-sided spectrum auction. The auction closed approximately one year later, having repurposed a total of 84 megahertz (MHz) of spectrum. The “Incentive Auction” included three primary components: (1) a reverse auction where broadcasters bid on the price at which they would voluntarily relinquish their current spectrum usage rights, (2) a forward ascending clock auction for flexible use wireless licenses which determined the winning bids for licenses within a given geographic region, and (3) an assignment phase, where winning bidders from the forward auction participated in single-bid, second price sealed auctions to determine the exact frequencies individual licenses would be assigned within that geographic region. The reverse auction and the forward auction together constituted a “stage.” To guarantee that sufficient MHz were cleared, the auction included a “final stage rule” which, if not met, triggered a clearing of the previous stage and the start of a new stage. This rule led to a total of four stages taking place in the Incentive Auction before the final assignment phase took place. Even at first glance, the Incentive Auction is unique among FCC spectrum auctions. Here we consider the estimated true valuation for these licenses based on market conditions. We further compare these results to more recent outcomes in previous FCC spectrum auctions for wireless services to determine if this novel auction mechanism
impacted auction outcomes.

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Advisor: Michelle Connolly | JEL Codes: L5, O3, K2, D44, L96

Security Without Equity? The Effect of Secure Communities on Racial Profiling by Police

By Jack Willoughby

Anecdotal and circumstantial evidence suggest that the implementation of Secure Communities, a federal program that allows police officers to more easily identify illegal immigrants, has increased racial bias by police. The goal of this analysis is to empirically evaluate the effect of Secure Communities on racial bias by police using motor vehicle stop and search data from the North Carolina State Bureau of Investigation. This objective differs from most previous research, which has largely attempted to quantify racial profiling for a moment in time rather than looking at how an event influences racial profiling. I examine the effects of Secure Communities on police treatment of Hispanics vs. whites with an expanded difference-in-difference approach that looks at outcomes in
motor vehicle search success rate, search rate conditional on a police stop, stop rate, and police action conditional on stop. Statistical analyses yield no evidence that the ratification of Secure Communities increased racial profiling against Hispanics by police. This finding is at odds with the anecdotal and circumstantial evidence that has led many to believe that the ratification of Secure Communities led to a widespread increase in racial profiling by police, a discrepancy that should caution policy makers about making decisions driven by stories and summary statistics.

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Advisor: Frank Sloan | JEL Codes: J15, K14, K37, K42 | Tagged: Racial Policing, Bias, Immigration Law, Secure Communities

Marijuana Pricing Structure and State-Level Price Determinants

By Rebecca Li

This study uses the PriceofWeed.com data set first examined in Thies (2012) to analyze the price-quantity relationship for marijuana transactions and to determine the effect of various state-level factors on marijuana prices. By applying the cost-based full fixed cost recovery pricing model developed by Britney, Kuzdrall, and Fartuch (1983), this paper finds support for an inverse price-quantity relationship for marijuana rather than a logarithmic or linear relationship. User-rated quality is robust and significant across all models, and price-quantity discount elasticity of -0.220 is observed empirically. An analysis of state-level legal, demand-side, and supply-side determinants of marijuana price demonstrates that medical marijuana has a negative relationship with price, perhaps due to the reduction in risk faced by suppliers when medical marijuana is legalized.

Honor’s Thesis

Data Set

Advisor: Michael Munger, Phil Cook | JEL Codes: D04, I18, K42 | Tagged: Marijuana, Price, Quality, Transaction Size

Market Power & Reciprocity Among Vertically Integrated Cable Providers

By Jeffery Shih-kai Shen

This paper seeks to investigate the effects of vertical integration on the cable industry. There are two main goals that the research paper will attempt to address. The first is to build upon existing research on favoritism shown by multichannel video programming distributors (MVPDs) to affiliated video programming networks. Second, the paper will use 2007 and 2010 industry data to investigate the possible existence of “quid pro quo” among vertically integrated MVPD cable providers. After evaluating the data with multivariate OLS Regressions, the evidence suggests that MVPD cable providers do tend to carry their own affiliated programming networks. Furthermore, the evidence supports the hypothesis that reciprocity relationships exist among major vertically integrated cable providers.

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JEL Codes: C01, D22, K21 | Tagged: Cable Provider, Empirical Analysis, Programming Distributor, Programming Network, Vertical Integration

Questions?

Undergraduate Program Assistant
Jennifer Becker
dus_asst@econ.duke.edu

Director of the Honors Program
Michelle P. Connolly
michelle.connolly@duke.edu