Fundamental Limits on <italic>Ex</italic>-Post Enforcement and Implications for Spectrum Rights

Abstract

The combination of emerging new communication technologies, economic growth, and limited amounts of available spectrum necessitate dynamic tiered sharing. This paper builds on the “spectrum jails” paradigm—a model for light-handed ex-post enforcement. We consider the situation of sharing spectrum between a single primary (higher-tier) user and a single secondary (lower-tier) user. Analyzing this as a two-player game that could be played Stackelberg or simultaneous, we examine what kinds of primary and secondary rights can be credibly enforced. We show that the primary can trust that it will be protected from too much harmful interference and we show how the regulator can set the ex-post enforcement parameters to do this no matter which secondary user becomes capable of using the band. It is impossible to give a universal guarantee to all secondary users that the primary will never make false reports (“cry wolf”) against them. However, it is possible to show that “compatible” secondary users will trust that the primary user will not make false reports against them when the spectrum opportunity is sufficiently attractive for secondary users.