Optimal Control of Broadcasting Spectrum

A socially desirable number of royalties-paying users of state-owned broadcasting spectrum is derived within an optimal control framework that allows free entry and exit. The analysis takes into account the trade-off between the benefits from higher variety and royalties’ revenues and the costs of the intensified interferences associated with entry. It also considers the opposing effects of broadcasts on aggregate income: information dissemination versus diversion of productive time. The steady-state of the broadcasting industry is derived for the case where these effects offset one another and for the case where the positive information-dissemination effect is dominant.