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THOMAS W. HAZLETT, GIANCARLO IBARGUEN, WAYNE LEIGHTON!
George Mason University, School of Law; Universidad Francisco Marroquin;
Federal Communications Commission
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1. INTRODUCTION.
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Review of Law & Economics, © 2007 by bepress
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Spectrum Liberalization in Guatemala and El Salvador / 439
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Spectrum Liberalization in Guatemala and El Salvador / 441
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Spectrum Liberalization in Guatemala and El Salvador / 443
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Spectrum Liberalization in Guatemala and El Salvador / 445
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446 / REVIEW OF LAW AND ECONOMICS
4. EL SALVADOR’S REFORMS
4.1. THE 1996-97 STATUTES AND THEIR ANTECEDENTS
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Review of Law & Economics, © 2007 by bepress
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Spectrum Liberalization in Guatemala and El Salvador / 447
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8#.#)#/%2&%$"/%18&$0:/7,0B&0/0fB/9$%01$0#.+&(.%#,$8&7,#'&$I(+,-,#&%,B'#8L&&
5. ADMINISTRATIVE RESULTS
5.1. GUATEMALA
E$8(,#$& (/+,#,-.+& (%$88)%$8& #/& (%/#$-#& ,0-)1*$0#& ,0#$%$8#8& ,0& Q).#$1.+.5&
,0-+):,0B& B/9$%01$0#& $""/%#8& #/& :$+.2& -/1($#,#,/0& ,0& 1/*,+$& #$+$('/0$&
1.%A$#8& 7',+$& Q).#$+& 7.8& *$,0B& (%,9.#,G$:& Y0$7& $0#%2& 7/)+:& %$:)-$& *,:8& "/%&
8#.#$&.88$#8_5&%$@)$8#$:&7PL8&'.9$&B$0$%.++2&*$$0&,88)$:L&!++&#/+:5&b5[\]&7PL8&
'.9$& *$$0& .7.%:$:& 8,0-$& #'$& *$B,00,0B& /"& #'$& %$"/%1& (%/-$88& #'%/)B'& D)0$&
`aa]5&.+/0B&7,#'&.((%/I,1.#$+2&Z5aaa&+,-$08$8&"/%&8.#$++,#$&.0:&/#'$%&)8$85&.0:&
\\a& .)#'/%,G.#,/08& "/%& B/9$%01$0#& .0:& .1.#$)%& )8$%8L& H$$& C.*+$& ]LZ& .0:&
3,B)%$& ]LZL& p"& #'$& b5[\]& 7PL8& ,88)$:& "/++/7,0B& %$"/%15& [ba& 7$0#& :,%$-#+2& #/&
#'$& "/%1$%& 8#.#$& #$+$-/11)0,-.#,/08& 1/0/(/+25& [Z\& 7$0#& :,%$-#+2& #/& /#'$%&
,0-)1*$0#85&.0:&`5Zb^&7$%$&.7.%:$:&*2&.)-#,/0L&&
&
Table 5.1. Spectrum Rights Issued by Guatemalan Government
Type of Right
Approximate Number
of Rights Issued
TUFs
(Frequency Use Titles)
3,985
Authorizations
Licenses
290 (government)
590 (amateurs)
1,000
Sources: Escalante (2005). Also, email correspondence with Mr. Escalante on July 6, 2005 and Sept. 12, 2005.
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
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*2&.&1$.8)%$&/"&#'$&#%.081,88,/0&(/7$%5&1)+#,(+,$:&*2&.&8$%9,-$&".-#/%&Y*.8$:&/0&+/-.#,/0&7,#',0&
#'$&8($-#%)1&*.0:_L&&
Review of Law & Economics, © 2007 by bepress
&
Spectrum Liberalization in Guatemala and El Salvador / 449
Figure 5.1: TUFs Issued in Guatemala
Number of TUFs Issued
1800
1600
1400
1200
1000
794
800
646
600
400
&
&
&
&
&
&
&
&
&
&
1999&
&
1590
209
200
0
1996
1997
1998
308
2000
240
2001
63
84
51
2002
2003
2004
Source: Escalante (2005).
5.2. EL SALVADOR
H,0-$& ,#8& Z[[^& %$"/%15& e+& H.+9.:/%& '.8& B%.0#$:& Z5bZZ& -/0-$88,/085& \a&
.)#'/%,G.#,/085& .0:& ]c& +,-$08$8L& H$$& C.*+$& ]L`L& p"& #'$& Z5bZZ& -/0-$88,/08&
B%.0#$:5& Z]`& 7$%$& .88,B0$:& 9,.& .)-#,/08L28& C'$& 0)1*$%& /"& -/0-$88,/08& ,0& e+&
H.+9.:/%& ,8& -/08,:$%.*+2& 81.++$%& #'.0& #'$& 0)1*$%& /"& 7PL8& ,0& Q).#$1.+.5&
#'/)B'& #',8& ,8& +.%B$+2& $I(+.,0$:& *2& #'$& H.+9.:/%.0& %$B)+.#/%W8& (%.-#,-$& /"&
B%/)(,0B& 1.02& "%$@)$0-,$8& ,0#/& .& 8,0B+$& -/0-$88,/0L& 3/%& $I.1(+$5& #'$& Z]`&
-/0-$88,/08& #'.#& '.9$& *$$0& .)-#,/0$:& ,0& e+& H.+9.:/%& %$(%$8$0#& ]ck& :,8#,0-#&
"%$@)$0-2&*.0:8L&!&8,0B+$&-/0-$88,/0&1.2&B%.0#&%,B'#8&#/&)8$&8$9$%.+&1$B.'$%#G&
,0&#'$&\aa&NMG&*.0:5&8$9$%.+&1$B.'$%#G&,0&#'$&[aa&NMG&*.0:5&$#-L&!8&.&%$8)+#5&
:,%$-#& -/1(.%,8/08& 7,#'& /#'$%& -/)0#%,$8& -.0& *$& 1,8+$.:,0BL& J)#5& .8&
:$1/08#%.#$:&,0&H$-#,/0&c5&8)"",-,$0#&8($-#%)1&,8&.9.,+.*+$&"/%&#'$&1/8#&',B'+2&
9.+)$:& 8$%9,-$8L& N/%$/9$%5& .8& ,0& Q).#$1.+.5& #'$& ,88).0-$& /"& +,-$08$8& '.8&
(%/-$$:$:& 7,#'/)#& $9,:$0#& .:1,0,8#%.#,9$& -/0")8,/0& /%& -/%%)(#,/0L& C',8& ,8&
:$8(,#$&.0&$I-$(#,/0.++2&+.%B$&8',"#&,0&#'$&+.7&.0:&.&:%.1.#,-&#%.08"/%1.#,/0&,0&
#'$&0.#)%$&/"&#'$&%,B'#8&*$,0B&,88)$:L&&
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
`\&E.#.&(%/9,:$:&#/&.)#'/%8&*2&H6QeC&%$(%$8$0#.#,9$8&,0&$1.,+&-/%%$8(/0:$0-$&/0&H$(#$1*$%&
Zk5&`aa]L&N)-'&/"&#',8&:.#.&.+8/&,8&.9.,+.*+$&/0&#'$&.B$0-2W8&7$*8,#$&)0:$%&#'$&#,#+$&S<$B,8#%/&:$&
e+$-#%,-,:.:&2&C$+$-/1)0,-.-,/0$85X&.#&777L8,B$#LB/*L89L&&
&
450 / REVIEW OF LAW AND ECONOMICS
Table 5.2. Spectrum Rights Issued by Salvadoran Government
Type of Right
Concessions
Authorizations
Licenses
Approximate Number of
1,311
80
56
Rights Issued
Source: Registry of the Superintendencia de Electricidad y Telecomunicaciones (SIGET),
available at www.siget.gob.sv. Also, email correspondence with authors on August 29, 2005.
6. ECONOMIC RESULTS
6.1. HYPOTHESES
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$+8$7'$%$_L& C',8& .""/%:8& .0& /((/%#)0,#2& #/& /*8$%9$& #'$& %$8)+#8& /"& (/+,-2&
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&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
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/"& 7,%$+$88& 8$%9,-$8& *2& 8$-#/%L& C'$8$& $8#,1.#$8& (+.-$& 1/*,+$& #$+$('/0$& 8$%9,-$& .8& #'$& 1/8#&
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%.0A,0B& ,8& +,A$+2& #/& *$& 8A$7$:& $9$0& 1/%$& ,0& #'$& :,%$-#,/0& /"& 1/*,+$& #$+$('/02& ,0& :$9$+/(,0B&
-/)0#%,$8L&Yp"-/1&`aa]5&g.9$%1.0&$#&.+L&`aa]_&
Review of Law & Economics, © 2007 by bepress
&
Spectrum Liberalization in Guatemala and El Salvador / 451
YZ_ .0&,0-%$.8$&,0&#'$&8($-#%)1&.9.,+.*+$&#/&1/*,+$&-.%%,$%85&&
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Y`_ .0&,0-%$.8$&,0&1/*,+$&('/0$&8$%9,-$&/)#()#L30&
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:,%$-#& ,1(+,-.#,/08& /"& +,*$%.+,G.#,/05& YZ_& .0:& Y`_L& C'.#& ,8& *$-.)8$& %$"/%18& #'.#&
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&
452 / REVIEW OF LAW AND ECONOMICS
6.2. TEST METHODOLOGY
p)%& 8.1(+$& -/08,8#8& /"& Zc& U.#,0& !1$%,-.0& 1/*,+$& ('/0$& 1.%A$#8531& 7,#'&
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<f8@).%$:L&Q$0$%,-.++25&#'$&$8#,1.#$:&%$B%$88,/08&.%$&:$",0$:&.8R&
ln y i # $ 0 " $ 1 ln GDPPC i " $ 2 ln Population i " $ 3 ln Fraseri " $ 4 ln Density i "
$ 5 (ln Density i ) 2 " $ 6 Liberal i " % i
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&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
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N$I,-/5&h,-.%.B).5&?.0.1.5&?.%.B).25&?$%)5&P%)B).25&K$0$G)$+.L&4/8#.&<,-.&'.8&.&B/9$%01$0#&
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b`&E.#.&8/)%-$8&.%$&:$#.,+$:&,0&!(($0:,I&ZL&
bb& P8,0B& g',#$W8& #$8#5& #'$& 0)++& '2(/#'$8,8& /"& '/1/8A$:.8#,-,#2& -/)+:& *$& %$m$-#$:& "/%& .++& "/)%&
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MOU _5& #'$&
GDPPC
8)((+$1$0#.%2&J%$)8-'f?.B.0n4//Afg$,8*$%B&#$8#&8'/78&#'.#&'/1/8A$:.8#,-,#2&-.0&*$&%$m$-#$:&
.#&#'$&Zav&8,B0,",-.0-$&+$9$+L&g',#$W8&#$8#&%$8)+#8&.%$&,0-+):$:&,0&!(($0:,I&`L&
bk& g$& #'.0A& .0& .0/021/)8& %$"$%$$& "/%& 8)BB$8#,0B& #'$& 7$,B'#$:& pUH& 1$#'/:& ,0& !-#/0& d&
K/B$+8.0B&YZ[[`_L&
Review of Law & Economics, © 2007 by bepress
&
Spectrum Liberalization in Guatemala and El Salvador / 453
#/& 8/+9$& #'$& '$#$%/8A$:.8#,-,#2& (%/*+$1L& !9$%.B,0B5& .0/#'$%& /(#,/05& ,8&
(/#$0#,.++2&)8$")+&*$-.)8$&-/)0#%2f8($-,",-&/*8$%9.#,/08&,0&#'$&8.1(+$&.%$&#.A$0&
"%/1& ",9$& -/08$-)#,9$& 2$.%8L& C'$8$& /*8$%9.#,/085& 0/#& ,0:$($0:$0#& .#& #'$&
-/)0#%2& +$9$+5& 1.2& B$0$%.#$& '$#$%/8A$:.8#,-& :,8#)%*.0-$8L& C/& #$8#& "/%& #',85& .&
8$-/0:& 8$#& /"& "/)%& pUH& %$B%$88,/085& Y`LZ_TY`Lk_5& .9$%.B$8& 9.+)$8& "/%& #'$&
:$($0:$0#&.0:&,0:$($0:$0#&9.%,.*+$8&Y:$",0$:&,0&C.*+$8&cLZ&.0:&cL`_&/9$%&#,1$&
"/%& $.-'& -/)0#%2L& p#'$%7,8$& #'$& 8#%)-#)%.+& "/%18& /"& #'$& %$B%$88,/08& .%$& #'$&
8.1$&.8&.*/9$L&!9$%.B,0B&%$:)-$8&8.1(+$&8,G$&"%/1&\a&#/&ZcL&
Table 6.1: Dependent Variables Used in the Pooled OLS Regressions
Variable
Spectrum
GDPPC
Explanation
Spectrum deployed by cellular carriers in MHz per $
thousand GDP per capita.
HHI
Hirschman-Herfindahl Index in cellular market based on
carrier subscribership levels.
ARPM
Average revenue per minute of mobile telephone service
(including pre-paid and post-paid subscribers).
MOU
GDPPC
Minutes of use for voice mobile telephone service, per $
thousand GDP per capita. Reported as a blend of pre-paid
and post-paid use, and then adjusted for overall population.
Table 6.2: Independent Variables Used in Pooled OLS Regressions
Variable
Explanation
GDPPC
Per-capita GDP, by country, PPP adjusted and in thousand
2000 international $.
Population
Fraser
In millions.&
An index value, 1-10, measures the general security of
property rights.
&
454 / REVIEW OF LAW AND ECONOMICS
Density
Population density of a country (in terms of number of
people per square kilometer).
Liberal
=1 if Guatemala or El Salvador, =0 otherwise.
C'$& 8$-/0:& 8$#& /"& %$B%$88,/0& %$8)+#8& Y`LZT`Lk_& .%$& -/08,8#$0#& 7,#'& #'/8$&
:$%,9$:& "%/1& #'$& ",%8#5& .+#'/)B'& #'$& /)#()#& .0:& (%,-$& $""$-#8& /"& +,*$%.+,G.#,/0&
.%$&8#.#,8#,-.++2&8,B0,",-.0#&.#&#'$&Zav5&*)#&0/#&#'$&]v&+$9$+5&($%'.(8&/7,0B&#/&
#'$&:$-+,0$&,0&:$B%$$8&/"&"%$$:/1&Y8$$&!(($0:,I&`_L&C'$&g',#$&.0:&J%$)8-'f
?.B.0n4//Afg$,8*$%B&#$8#85&'/7$9$%5&%$9$.+&#'.#&7,#'&-/)0#%2f+$9$+&.9$%.B,0B5&
#'$&0)++&'2(/#'$8,8&/"&'/1/8A$:.8#,-,#2&-.00/#&*$&%$m$-#$:&,0&.02&/"&#'$&"/)%&
%$B%$88,/08&Y8$$&!(($0:,I&`_L&&
p)%& (%,1.%2& 8#.#,8#,-.+& %$8)+#8& .%$& :$%,9$:& "%/1& .& #',%:& 8$#& /"& $8#,1.#$:&
$@).#,/08L& C',8& 8$#& -/08,8#8& /"& "/)%& %.0:/1& $""$-#8& %$B%$88,/085& YbLZ_TYbLk_5&
$I.1,0,0B&(%/(/8,#,/08&YZ_TYk_L35&C'$&:$($0:$0#&9.%,.*+$8&%$1.,0&.8&:$",0$:&,0&
C.*+$&cLZL&60&$.-'&1/:$+5&#'$&:$($0:$0#&9.%,.*+$&/"&,0#$%$8#&,8&%$B%$88$:&/0#/&
#'$& U+A,*0/& :)1125&8$#& #/& /0$& "/%&Q).#$1.+.& /%& e+& H.+9.:/%5& G$%/& /#'$%7,8$L&
C'$&,0:,9,:).+&'$#$%/B$0$,#,$8&.%$&:$",0$:&.0:&-+)8#$%$:36&.#&#'$&-/)0#%2&+$9$+&
#/& ,0:,-.#$& #'.#& -/)0#%2f+$9$+& /*8$%9.#,/08& .%$& 0/#& ,0:$($0:$0#& "%/1& $.-'&
/#'$%L&!+8/5&#'$&8#.0:.%:&$%%/%8&.%$&'$#$%/8A$:.8#,-,#2&%/*)8#L&&
C'$& %.0:/1& $""$-#8& .((%/.-'& '$+(8& #/& ")++2& -.(#)%$& #'$& $""$-#8& /"& -/)0#%2&
-'.%.-#$%,8#,-8&.0:&#'$%$"/%$&,8/+.#$&#'$&,1(+,-.#,/08&/"&#'$&9.+)$&-'.0B$8&,0&#'$&
U+A,*0/#:)112L&60&#'$&(%$9,/)8&%$B%$88,/085&YZLZ_TYZLk_&.0:&Y`LZ_TY`Lk_5&7$&#%,$:&
#/&$I(+.,0&#'$&-/)0#%2&'$#$%/B$0$,#,$8&7,#'&#'$&8$#&/"&9.%,.*+$8&(%$8$0#$:&,0&C.*+$&
cL`5& $I-+):,0B& U+A,*0/6# M/7$9$%5& #'$& J%$)8-'f?.B.0nU.B%.0B$& N)+#,(+,$%& #$8#8&
8'/7&#'.#&#'$8$&$I(+.0.#/%2&9.%,.*+$8&.%$&".%&"%/1&*$,0B&8)"",-,$0#&#/&-'.%.-#$%,G$&
-/)0#%2& '$#$%/B$0$,#,$8L& YC'$& 0)++& '2(/#'$8,8& #'.#& #'$& %$8,:).+& 9.%,.0-$& /"& #'$&
-/)0#%2f8($-,",-& :,8#)%*.0-$8& .%$& G$%/& -.0& *$& %$m$-#$:& 7,#'& .& #$8#& 8#.#,8#,-& /"&
Z]cLc`5& 7',-'& ,8& :,8#%,*)#$:& .8& -',f8@).%$:& 7,#'& /0$& :$B%$$& /"& "%$$:/1R& (f
9.+)$waLaaa5& 7'$0& #'$& :$($0:$0#& 9.%,.*+$& ,8& ln Spectrum _L& C'$%$"/%$5& #'$&
GDPPC
8)*8$@)$0#&8$-#,/0&%$(/%#8&#'$&%$8)+#8&"%/1&#'$&%.0:/1&$""$-#8&%$B%$88,/08&YbLZ_T
YbLk_&,0&:$#.,+L&C'$&J%$)8-'f?.B.0nU.B%.0B$&N)+#,(+,$%&#$8#&%$8)+#8&"/%&.++&/"&#'$&
#',%:&8$#&%$B%$88,/08&YbLZ_TYbLk_&.%$&.B.,0&(%/9,:$:&,0&!(($0:,I&`L&
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
b]&6#&8'/)+:&*$&0/#$:&#'.#&.&",I$:&$""$-#8&.((%/.-'&,8&0/#&.((%/(%,.#$&B,9$0&#'.#&#'$%$&$I,8#8&0/&
9.%,.#,/0&,0&#'$&8($-#%)1&.++/-.#,/0&%$B,1$8&,0&Q).#$1.+.&.0:&e+&H.+9.:/%&"%/1&`aaa&#/&`aakL&
bc&H$$&3%//#&YZ[\[_&.0:&</B$%8&YZ[[b_L&
Review of Law & Economics, © 2007 by bepress
&
Spectrum Liberalization in Guatemala and El Salvador / 455
6.3. RESULTS
6.3.1. Spectrum
&
Figure 6.1: Radio Spectrum Deployment (in MHz)
200
180
Paraguay
Spectrum (MHz)
160
El Salvador
Chile
140
120
Guatemala
Mexico
Argentina
Brazil
80
14-country average
Colombia
100
Uruguay
Bolivia
Peru
Nicaragua
60
Ecuador
Panama
40
Venezuela
Honduras
20
0
3,B)%$& cLZ& 8'/78& #'$& 8($-#%)1& :$(+/21$0#& Y,0& NMG_& ,0& #'$& Zc& U.#,0&
!1$%,-.0&-/)0#%,$8&-/08#,#)#,0B&/)%&8.1(+$L&C'$&Zkf-/)0#%2&.9$%.B$5&$I-+):,0B&
Q).#$1.+.&.0:&e+&H.+9.:/%5&,8&[aLab&NMGL&Q).#$1.+.&.0:&e+&H.+9.:/%&.%$&7$++&
.*/9$& #',8& .9$%.B$& 7,#'& 8($-#%)1& :$(+/21$0#8& /"& Zka& .0:& Zb^L\^& NMG5&
%$8($-#,9$+2L&g$&-.00/#&:,%$-#+2&)8$&.&%.0:/1&$""$-#8&%$B%$88,/0&1/:$+&#/&#$8#&
#'$& $""$-#8& /"& #'$& 8($-#%)1& +,*$%.+,G.#,/0& ,0& Q).#$1.+.& .0:& e+& H.+9.:/%& /0&
8($-#%)1&:$(+/21$0#&*$-.)8$&8($-#%)1&#.A$8&,0#$B$%&9.+)$8&,0&c]&/)#&/"&#'$&\a&
/*8$%9.#,/08L& M/7$9$%5& .& #7/f8,:$:& g,+-/I/0& %.0Af8)1& #$8#& 8'/78& #'.#& #'$&
8($-#%)1& ,0-%$.8$& "%/1& #'$& Zk& -/)0#%,$8& #/& Q).#$1.+.& .0:& e+& H.+9.:/%& ,8&
8#.#,8#,-.++2&8,B0,",-.0#&YGwbL\b`aj&(waLaaaZ_L&
!8&.0&.+#$%0.#,9$&$-/0/1$#%,-&.((%/.-'5&7$&:,9,:$&#'$&8($-#%)1&:$(+/2$:&,0&
$.-'&-/)0#%2&,0&#'$&8.1(+$&7,#'&QE?&($%&-.(,#.&Y???&.:m)8#$:&.0:&,0&-/08#.0#&
`aaa& ,0#$%0.#,/0.+& l_5& .0:& #'$0& %$B%$88& #'$& 0/%1.+,G$:& 8($-#%)1& /0#/& #'$&
U+A,*0/#:)112L&C',8&0/%1.+,G.#,/0&B,9$8&1/%$&$I(+.0.#/%2&(/7$%&#/&#'$&U+A,*0/#
,0:$($0:$0#& 9.%,.*+$& .0:& ,8& %$.8/0.*+$5& -/08,:$%,0B& #'$& (/8,#,9$& -/%%$+.#,/0&
*$#7$$0&8($-#%)1&.0:&QE?&($%&-.(,#.5&.8&8$$0&,0&3,B)%$&cL`L&&
&
&
456 / REVIEW OF LAW AND ECONOMICS
Figure 6.2: Log Spectrum Deployment (in MHz) versus Log GDP ($/capita)
5.50
Paraguay
5.25
Guatemala
4.75
Bolivia
Argentina
Brazil
Mexico
Peru
4.50
Uruguay
4.25
Venezuela
Nicaragua
Panama
Ecuador
8.50
8.25
7.75
7.50
Honduras
9.50
3.25
9.25
The simple regression coefficient is
0.53, and increases to 0.62 if Guatemala
and El Salvador are excluded.
3.50
8.75
3.75
9.00
4.00
3.00
Chile
El Salvador
Colombia
8.00
Log Spectrum (MHz)
5.00
Log GDP ($/capita)
!"#$%& 0/%1.+,G,0B& 8($-#%)1& /0& ($%& -.(,#.& QE?5& 7$& )8$& #'$& "/++/7,0B&
%$B%$88,/0& 1/:$+& #/& $I.1,0$& #'$& $""$-#8& .88/-,.#$:& 7,#'& #'$& 8($-#%)1&
+,*$%.+,G.#,/0&(/+,-,$8&,0&Q).#$1.+.&.0:&e+&H.+9.:/%R&
ln(
Spectrum
) ij # $ 1 ( Liberal " (' " & i ) " % ij
GDPPC
5&
i # 1,...,16 && j # 2000,...,2004 5&
7'$%$ ( Spectrum ) +O#,8&:$",0$:&#/&*$&#'$&#/#.+&%.:,/&8($-#%)1&Y,0&NMG_&.9.,+.*+$&#/&
GDPPC
1/*,+$& /($%.#/%8& :,9,:$:& *2& ($%& -.(,#.& QE?& Y,0& l#'/)8.0:8n-.(,#._& ,0& #'$& +#'&
-/)0#%2& .0:& ,0& #'$& O#'& 2$.%j& &+& %$(%$8$0#8& #'$& -/)0#%2f8($-,",-& :,8#)%*.0-$8j& %+O&
,0:,-.#$8&#'$&/*8$%9.#,/0f8($-,",-&:,8#)%*.0-$8L&g$&,0,#,.++2&%)0&#'$&%$B%$88,/0&/0&
#'$&-/1(+$#$&Zcf-/)0#%2&8.1(+$5&.0:&#'$0&:,8#,0B),8'&#'$&$""$-#8&/"&+,*$%.+,G.#,/0&
,0& Q).#$1.+.& .0:& e+& H.+9.:/%& ,0:,9,:).++2& *2& $I-+):,0B& ",%8#& e+& H.+9.:/%& .0:&
#'$0&Q).#$1.+.&"%/1&#'$&8.1(+$L&C.*+$&cLbLZ&-/0#.,08&%$B%$88,/0&%$8)+#8L&
Review of Law & Economics, © 2007 by bepress
&
Spectrum Liberalization in Guatemala and El Salvador / 457
&
Table 6.3.1: Liberalization and Radio Spectrum (MHz)
Dep. Var:
Spectrum
ln(
)
GDPPC
Liberalization
Coefficient
(Std. Dev.)
z
[95% Conf. Interval]
Constant
Coefficient
(Std. Dev.)
z
[95% Conf. Interval]
I
Dummy
(Guatemala +
El Salvador)
II
Dummy
excluding
El Salvador
III
Dummy
excluding
Guatemala
.7852
(.1368)
5.74
[.5171 1.0533]
.8697
(.1222)
7.12
[.6302 1.1093]
.7007
(.1222)
5.73
[.4612 .9402]
2.6935
(.1219)
22.10
[2.4546&& 2.9324]
2.6935
(.1222)
22.04
[2.4540 2.9331]
2.6935
(.1222)
22.04
[2.4540 2.9331]
g$& ",0:& #'$& -/$"",-,$0#& "/%& U+A,*0/# #/& *$& 8#.#,8#,-.++2& 8,B0,",-.0#& ,0& .++& #'%$$&
%$B%$88,/08L& H($-#%)1& +,*$%.+,G.#,/0# /0& .9$%.B$# ,0-%$.8$8& #'$& *.0:7,:#'&
.9.,+.*+$& #/& 1/*,+$& 0$#7/%A8& *2& ZcLa`& NMG& ($%& l#'/)8.0:& QE?& ($%& -.(,#.5&
.*/)#& :/)*+$& #'$& 1$.0& .++/-.#,/0& /"& ZcL]ZL& 3,B)%$& cLb& :,8(+.28& #'$& .++/-.#$:&
8($-#%)1& ($%& l#'/)8.0:& QE?& ($%& -.(,#.& "/%& $.-'& -/)0#%2& ,0& #'$& 8.1(+$L37&
4/)(+$:& 7,#'& #'$& %$8)+#8& "%/1& #'$& 8$-/0:& 8$#& /"& %$B%$88,/08& Y`LZf`Lk_5& #'$&
$9,:$0-$&#'$0&8)((/%#8&#'$&'2(/#'$8,8&#'.#&+,*$%.+&(%/($%#2&%)+$8&.%$&.88/-,.#$:&
7,#'&B%$.#$%&*.0:7,:#'&*$,0B&1.:$&.9.,+.*+$&#/&#'$&1.%A$#(+.-$L&
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
b^&
Q,9$0& #'$& %$"/%18& ,0& /)%& +,*$%.+& 8.1(+$5& 7$& 1$.8)%$& 8($-#%)1& .++/-.#$:& "/%& 1/*,+$&
#$+$-/11)0,-.#,/08&.8&#'$&*.0:7,:#'&.9.,+.*+$&#/&7,%$+$88&('/0$&-.%%,$%8L&60&Q).#$1.+.5&7'$%$&
0/&)8$f8($-,",-&+,-$08$8&.%$&,88)$:5&#',8&.++/78&)8&#/&-/)0#&#'$&"%$@)$0-2&8(.-$&,0&#'$&CP38&'$+:&
*2&7,%$+$88&/($%.#/%8L&
&
458 / REVIEW OF LAW AND ECONOMICS
Spectrum (MHz)/ GDP ($ thousand/capita)
Figure 6.3: Radio Spectrum Deployment per $ thousand GDP per capita
45.00
40.00
35.00
Paraguay
Bolivia
Guatemala
30.00
El Salvador
25.00
20.00
Nicaragua 14-country average
Colombia
15.00
10.00
Brazil
Argentina
Chile
Ecuador
Peru
Mexico
Honduras
Uruguay
Venezuela
Panama
5.00
0.00
6.3.2. Competition
C/& $9.+).#$& #'$& -/1($#,#,9$& $""$-#8& /"& +,*$%.+,G.#,/05& 7$& -.+-)+.#$& M$%",0:.'+f
M,%8-'1.0& ,0:,-$8& YMM6_& -/1()#$:& "%/1& 8'.%$8& /"& 1/*,+$& #$+$('/0$&
%$9$0)$8L&!&:$-%$.8$&,0&MM6&,8&'$%$&.88/-,.#$:&7,#'&.0&,0-%$.8$&,0&-/1($#,#,/0L&
g$& )8$& #'$& "/++/7,0B& %.0:/1& $""$-#8& %$B%$88,/0& 1/:$+& #/& ,09$8#,B.#$& #'$&
$""$-#8&/"&+,*$%.+,G.#,/0&/0&MM6R&
ln( HHI ) ij # $ 1 ( Liberal " (' " & i ) " % ij ,
i # 1,...,16
j # 2000,...,2004 .
g$&$8#,1.#$&#'$&%$B%$88,/0&",%8#&/0&#'$&")++&8.1(+$j&#'$0&.B.,05&$I-+):,0B&e+&
H.+9.:/%j&.0:&#'$0&/0-$&1/%$5&,0-+):,0B&e+&H.+9.:/%&*)#&$I-+):,0B&Q).#$1.+.L&
C'$& %$8)+#85& -/0#.,0$:& ,0& C.*+$& cLbL`5& 8'/7& #'.#& #'$& -/$"",-,$0#& "/%& U+A,*0/# ,8&
0$B.#,9$&.0:&8#.#,8#,-.++2&8,B0,",-.0#&,0&.++&#'%$$&-.8$8L&3,B)%$&cLk&8'/78&#'$&MM6&
9.+)$8& "/%& $.-'& -/)0#%2& ,0& #'$& 8.1(+$5& .8& 7$++& .8& #'$& Zkf-/)0#%2& .9$%.B$L&
U,*$%.+,G.#,/0#:$-%$.8$8&#'$&MM65&/0&.9$%.B$5&"%/1&k\[`&#/&bb\ZL&
Review of Law & Economics, © 2007 by bepress
&
Spectrum Liberalization in Guatemala and El Salvador / 459
&
Table 6.3.2: Liberalization and HHI
Liberalization
Coefficient
-.3045
(.0895)
-3.40
[-.4798 -.1291]
-.2904
(.0891)
-3.26
[-.4650 -.1157]
-.3186
(.0891)
-3.58
[-.4932 -.1440]
8.4282
(.0889)
94.85
[8.2540 8.6024]
8.4282
(.0891)
94.60
[8.2536 8.6028]
8.4282
(.0891)
94.60
[8.2536 8.6028]
(Std. Dev.)
z
[95% Conf. Interval]
Constant
Coefficient
(Std. Dev.)
z
[95% Conf. Interval]
III
Dummy
excluding
Guatemala
II
Dummy
excluding
El Salvador
I
Dummy
(Guatemala +
El Salvador)
Dep. Var.:
ln(HHI )
&
Figure 6.4: Herfindahl-Hirschman Index (HHI)
10000
Honduras
9000
8000
Nicaragua
7000
HHI
6000
Mexico
14-country average
5000
4000
3000
Bolivia
Argentina
Peru
Guatemala
Brazil
Chile
El Salvador
2000
1000
0
&
Uruguay
Panama
Ecuador
Colombia
Paraguay
Venezuela
460 / REVIEW OF LAW AND ECONOMICS
6.3.3. Price
g$&)8$&#'$&.9$%.B$&%$9$0)$&($%&1,0)#$&Y!<?N_&.8&.&(%/I2&"/%&%$#.,+&(%,-$L38&
C'$& !<?N& 1$.8)%$& '$+(8& 8,1(+,"2& #'$& -/1(+,-.#,/08& .88/-,.#$:& 7,#'& 0/0f
+,0$.%&(%,-,0B5&-/11/0+2&)8$:&,0&1/*,+$&#$+$('/0$&1.%A$#8L&U//A,0B&.#&3,B)%$&
cL]5& 7$& -.0& 8$$& #'.#& #'$& !<?N& ,0& Q).#$1.+.& ,8& *$+/7& #'$& Zkf-/)0#%2& U.#,0&
!1$%,-.0&.9$%.B$&7'$%$.8&e+&H.+9.:/%W8&!<?N&,8&8+,B'#+2&.*/9$&.9$%.B$L&&
&
Figure 6.5: Average Revenue Per Minute (ARPM)
&
0.55
0.50
Nicaragua
0.45
Panama
0.40
ARPM
0.35
0.30
El Salvador
14-country average
0.25
0.20
0.15
0.10
Bolivia
Argentina
Venezuela
Honduras
Mexico
Peru
Ecuador
Uruguay
Paraguay
Brazil
Chile
Guatemala
Colombia
0.05
0.00
C'$& %.0:/1& $""$-#8& %$B%$88,/0& 1/:$+& ,8& (%/9,:$:& *$+/7& .0:& C.*+$& cLbLb&
-/0#.,08&#'$&%$8)+#8L&&
ln( ARPM ) ij # $ 1 ( Liberal " (' " & i ) " % ij ,
i # 1,...,16
j # 2000,...,2004 .
g'$0&!<?N&,8&%$B%$88$:&.B.,08#&#'$&U+A,*0/#:)112&)8,0B&#'$&")++&Zcf-/)0#%2&
8.1(+$5& +,*$%.+,G.#,/0& ,0& Q).#$1.+.& .0:& e+& H.+9.:/%& ,8& .88/-,.#$:& 7,#'& .&
:$-%$.8$&,0&!<?N5&*)#&#'$&:$-%$.8$&,8&0/#&8#.#,8#,-.++2&8,B0,",-.0#L&eI-+):,0B&e+&
H.+9.:/%& "%/1& #'$& 8.1(+$5& !<?N& :$-%$.8$8& *2& .*/)#& ]cv& 7,#'& #'$&
+,*$%.+,G.#,/0&,0&Q).#$1.+.5&.0:&#'$&$""$-#&,8&8#.#,8#,-.++2&8,B0,",-.0#L&C'$&8.1$&
%$B%$88,/05&7'$0&,0-+):,0B&e+&H.+9.:/%&*)#&$I-+):,0B&Q).#$1.+.5&,0:,-.#$8&#'.#&
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
b\&C'$&:.#.&)8$:&'$%$&%$(/%#&.9$%.B$&%$9$0)$8&($%&1/0#'&($%&8)*8-%,*$%&"/%&1/*,+$&9/,-$&8$%9,-$&.0:&
$I-+):$&%$9$0)$8&"/%&/#'$%&8$%9,-$85&8)-'&.8&#$I#&1$88.B,0B5&$1.,+5&9,:$/5&.0:&B.1,0BL&g$&:,9,:$&#'$8$&
",B)%$8&*2&#'$&1,0)#$8&/"&)8$&($%&1/0#'&($%&8)*8-%,*$%&#/&/*#.,0&#'$&.9$%.B$&%$9$0)$8&($%&1,0)#$L&
Review of Law & Economics, © 2007 by bepress
&
Spectrum Liberalization in Guatemala and El Salvador / 461
!<?N& ,0-%$.8$8& 7,#'& +,*$%.+,G.#,/0& ,0& e+& H.+9.:/%5& *)#& *2& .& 8#.#,8#,-.++2&
,08,B0,",-.0#&1.B0,#):$L&&
&
Table 6.3.3: Liberalization and Average Revenue per Minute
Dep. Var.:
ln(ARPM )
Liberalization
Coefficient
(Std. Dev.)
z
[95% Conf. Interval]
Constant
Coefficient
(Std. Dev.)
z
[95% Conf. Interval]
II
Dummy
excluding
El Salvador
III
Dummy
excluding
Guatemala
-.2545
(.3551)
-0.72
[-.9504 .4414]
-.7104
(.1178)
-6.03
[-.9413, -.4794]
.2013
(.1178)
1.71
[-.0296, .4323]
-1.5417
(.1175)
-13.12
[-1.7721 -1.3114]
-1.5417
(.1178)
-13.08
[-1.7727 -1.3108]
-1.5417
(.1178)
-13.08
[-1.7727 -1.3108
I
Dummy
(Guatemala +
El Salvador)
6.3.4. Output
g$&:$",0$&#'$&/)#()#&/"&#'$&1/*,+$&#$+$('/0$&1.%A$#&.8&#'$&#/#.+&1,0)#$8&/"&
1/*,+$&('/0$&)8$&,0&.&1/0#'&YNpP_&($%&($%8/0L39&3,B)%$&cLc&8'/78&#'$&NpP&
($%& ($%8/0& "/%& Zc& U.#,0& !1$%,-.0& -/)0#%,$8& #/B$#'$%& 7,#'& #'$& Zkf-/)0#%2&
.9$%.B$& $I-+):,0B& Q).#$1.+.& .0:& e+& H.+9.:/%L& Q).#$1.+.& ,8& .*/9$& .0:& e+&
H.+9.:/%&,8&*$+/7&#'$&Zkf-/)0#%2&.9$%.B$L&&
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
b[&&C',8&,8&0/#&NpP&($%&8)*8-%,*$%5&*)#&($%&-.(,#.L&&
&
462 / REVIEW OF LAW AND ECONOMICS
Figure 6.6: Minutes of Use (MOU) per person
MOU (minutes per month per person)
&
55
50
Chile
45
40
35
30
Guatemala
25
Brazil
Argentina
20
Mexico
El Salvador
15
Colombia
10
Venezuela
Paraguay
14-country average
Bolivia
Panama
Uruguay
Ecuador
Peru
5
Honduras
Nicaragua
0
4.5
Chile
4.0
3.5
Guatemala
Brazil
Venezuela
Panama
Paraguay
El Salvador
3.0
2.5
Bolivia
Uruguay
Peru
Honduras
1.5
Argentina
Mexico
Colombia
Ecuador
2.0
Nicaragua
The simple regression coefficient
is 1.06, and increases to 1.16 after
Guatemala and El Salvador are
excluded.
Log GDP ($/capita)
Review of Law & Economics, © 2007 by bepress
&
9.50
9.25
9.00
8.75
8.50
8.25
8.00
7.75
1.0
7.50
Log MOU (in minutes per month per person)
!8&3,B)%$&cL^&:$1/08#%.#$85&'/7$9$%5&#'$%$&,8&.&(/8,#,9$&-/%%$+.#,/0&*$#7$$0&
#'$&NpP&($%&($%8/0&.0:&QE?&($%&-.(,#.L&
&
&
Figure 6.7: Log Minutes of Use (minutes/person) versus Log GDP ($/capita)
Spectrum Liberalization in Guatemala and El Salvador / 463
C'$%$"/%$5&:,9,:,0B&#'$&NpP&($%&($%8/0&*2&QE?&($%&-.(,#.5&7$&-.0&8$$&,0&
3,B)%$&cL\&#'.#&Q).#$1.+.&,8&8,B0,",-.0#+2&.0:&e+&H.+9.:/%&,8&8+,B'#+2&.*/9$&#'$&
Zkf-/)0#%2&.9$%.B$L&
MOU (minutes per month per person) /
GDP (in $ thousand/capita)
Figure 6.8: Minutes of Use (MOU) per person per $ thousand GDP per
capita
7.0
Guatemala
6.5
6.0
5.5
5.0
4.5
4.0
Chile
Paraguay
3.5
Brazil
3.0
2.5
2.0
1.5
Venezuela
Bolivia
Ecuador
El Salvador
14-country average
Panama
Colombia
Mexico
Honduras
Argentina
Nicaragua
1.0
0.5
Peru
Uruguay
0.0
&
60& $8#,1.#$8& )8,0B& #'$& %.0:/1& $""$-#8& %$B%$88,/0& 1/:$+5& %.:,/& 8($-#%)1&
+,*$%.+,G.#,/0&,0&Q).#$1.+.&.0:&e+&H.+9.:/%&,8&.88/-,.#$:&7,#'&.0&,0-%$.8$&,0&#'$&
1,0)#$8&/"&)8$&Y($%&($%8/0&($%&l#'/)8.0:&QE?&($%&-.(,#._5&.0:&#'$&$""$-#&,8&
8#.#,8#,-.++2&8,B0,",-.0#L&C'$&1/:$+&,8&8($-,",$:&'$%$5&7,#'&%$8)+#8&,0&C.*+$&cLbLkR&&
ln(
MOU
) ij # $ 1 ( Liberal " (' " & i ) " % ij ,
GDPPC
i # 1,...,16
j # 2000,...,2004 .
&
464 / REVIEW OF LAW AND ECONOMICS
&
Table 6.3.4: Liberalization and Minutes of Use
I
Dummy
(Guatemala +
El Salvador)
Dep. Var.:
ln(
MOU
)
GDPPC
Liberal
Coefficient
(Std. Dev.)
z
[95% Conf. Interval]
Constant
Coefficient
(Std. Dev.)
z
[95% Conf. Interval]
II
Dummy
excluding
El Salvador
III
Dummy
excluding
Guatemala
.6241
(.2771)
2.25
[.0810 1.1672]
.9570
(.1304)
7.34
[.7014 1.2127]
.2913
(.1304)
2.23
[.0356 5469]
.8841
(.1301)
6.80
[.6291 1.1390]
.8841
(.1304)
6.78
[.6284 1.1397]
.8841
(.1304)
6.78
[.6284 1.1397]
&
6.3.5. Summary of Empirical Tests
&C'$& $1(,%,-.+& $9,:$0-$& B+$.0$:& "%/1& 1/*,+$& #$+$('/0$& 1.%A$#85& 7',+$&
(%$+,1,0.%25& *%/.:+2& 8)((/%#8& #'$& 4/.8$.0& -/0m$-#)%$& #'.#& :$-$0#%.+,G$:&
(%/($%#2& %,B'#8& 7$%$& %$+.#,9$+2& $"",-,$0#& 1$-'.0,818& "/%& (/+,-,0B& 8($-#%)1&
%$8/)%-$& )8$L& !8& 8)11.%,G$:& ,0& C.*+$& cLk5& #'$& +,*$%.+,G.#,/0& :)112& .0:&
:)11,$8& "/%& $.-'& /"& #'$& #7/& -/)0#%,$8& ,0:,9,:).++2& .%$& .88/-,.#$:& 7,#'& 1/%$&
*.0:7,:#'& *$,0B& 1.:$& .9.,+.*+$& #/& 1.%A$#& (.%#,-,(.0#85& .0:& 7,#'& .& ',B'$%&
:$B%$$& /"& -/1($#,#,9$0$88& .1/0B& 1/*,+$& ('/0$& -.%%,$%85& .++& /"& 7',-'& .%$&
8#.#,8#,-.++2& 8,B0,",-.0#L& <$#.,+& (%,-$8& .(($.%& +/7$%& "/%& #'$& -/1*,0$:& :)112&
8.1(+$& #'.0& $+8$7'$%$& ,0& U.#,0& !1$%,-.5& 2$#& #'$& :,""$%$0-$& ,8& 8#.#,8#,-.++2&
,08,B0,",-.0#&$I-$(#&,0&#'$&Q).#$1.+.0&:$-%$.8$L&g,#'&%$8($-#&#/&/)#()#5&*/#'&
+,*$%.+&%$B,1$8&.%$&8$(.%.#$+2&.0:&m/,0#+2&.88/-,.#$:&7,#'&8#.#,8#,-.++2&8,B0,",-.0#&
,0-%$.8$8&,0&1/*,+$&)8.B$L&M$0-$5&#'$&:/1,0.0#&(.##$%0&/*8$%9$:&,0&#'$8$&:.#.&
,8&-/08,8#$0#&7,#'&.#&+$.8#&#'%$$&.0:&.&'.+"&/"&#'$&"/)%&$1(,%,-.+&'2(/#'$8$8L&&
&
&
Review of Law & Economics, © 2007 by bepress
&
Spectrum Liberalization in Guatemala and El Salvador / 465
&
Table 6.4. Summary of Econometric Results
Dependent
Variable
Predicted
Sign for
Liberal
Dummy
II
Dummy
excluding
El Salvador
I
Dummy
(Guatemala +
El Salvador)
III
Dummy
excluding
Guatemala
Actual
Sign for
Liberal
Dummy
Statistical
Signif.
(Y/N)
Actual
Sign for
Liberal
Dummy
Statistical
Signif.
(Y/N)
Actual
Sign for
Liberal
Dummy
Statistical
Signif.
(Y/N)
Spectrum
)
GDP
+
+
Y
+
Y
+
Y
ln(HHI )
-
-
Y
-
Y
-
Y
ln( ARPM )
-
-
N
-
Y
+
N
+
+
Y
+
Y
+
Y
ln(
ln(
MOU
)
GDP
7. TRANSACTION COSTS
g,#'& .02& (/+,-2& %$"/%15& #'$& (/88,*,+,#2& .%,8$8& #'.#& #%.08,#,/0.+& :,"",-)+#,$8& 7,++&
:/1,0.#$& B.,08L& C',8& (%/8($-#& ,8& (.%#,-)+.%+2& ,1(/%#.0#& ,0& 7,%$+$88&
#$+$-/11)0,-.#,/08&"/%&#7/&%$.8/08L&3,%8#5&#'$&-$0#%.+,G$:&8($-#%)1&.++/-.#,/0&
%$B,1$& '.8& *$$0& ',8#/%,-.++2& 8)((/%#$:& 7,#'& .%B)1$0#8& -/0-$%0,0B& #'$&
#%.08.-#,/08& -/8#8& /"& (%,9.#$& /70$%8',(L& H$-/0:5& B+/*.+& 1.%A$#8& "/%&
1.0)".-#)%$:& 7,%$+$88& $@),(1$0#& Y'.0:8$#85& *.8$& 8#.#,/085& .0:& /#'$%& -$++)+.%&
0$#7/%A& ,0"%.8#%)-#)%$_& $I',*,#& (%/0/)0-$:& $-/0/1,$8& /"& 8-.+$L& H)-'&
$-/0/1,$8&1.2&")0:.1$0#.++2&,1(.-#&#'$&8)--$88&/"&(/+,-2&%$"/%185&.+#'/)B'&,#&
,8&0/#&-+$.%&,0&7',-'&:,%$-#,/0L40&60&.02&$9$0#5&7$&'$%$&$I.1,0$&'/7&#'$&-/8#8&
/"& .++/-.#,0B& %.:,/& 8($-#%)1& .(($.%& #/& *$& ,1(.-#$:5& ,0& */#'& #'$& (%,9.#$& .0:&
()*+,-&8$-#/%85&)0:$%&#'$&+,*$%.+&8($-#%)1&%$B,1$8&*$,0B&$9.+).#$:L&
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
ka& Q+/*.+& 8#.0:.%:8& 1.2& ".-,+,#.#$& $I($%,1$0#.#,/0& 7,#'& +,*$%.+& %$B,1$8& ,0& 81.++& $-/0/1,$85&
(%/9,:,0B& (%,9.#$& 1.%A$#& -//%:,0.#,/0& 7,#'/)#& B/9$%01$0#& %$B)+.#,/0L& !+#$%0.#,9$+25& 81.++&
1.%A$#8& 1.2& 0/#& -.(#)%$& 1.02& /"& #'$& .:9.0#.B$8& /"& "%$$& $0#%2& Y:)$& #/& +,*$%.+,G.#,/0_& *$-.)8$&
8-.+$&$-/0/1,$8&.%$&0/#&.9.,+.*+$L&&
&
466 / REVIEW OF LAW AND ECONOMICS
7.1. PRIVATE SECTOR
7.1.1. Guatemala
6#& '.8& *$$0& 8'/70& #'.#& +,*$%.+& %$B,1$8& .%$& %$+.#,9$+2& 8)--$88")+& ,0& .88,B0,0B&
7,%$+$88& (%/($%#2& %,B'#85& .0:& #'.#& +,*$%.+,G$:& 1/*,+$& ('/0$& 1.%A$#8&
:$1/08#%.#$& .& ',B'& :$B%$$& /"& $"",-,$0-2& %$+.#,9$& #/& /#'$%& U.#,0& !1$%,-.0&
1.%A$#8L&C'$8$&",0:,0B8&,1(+2&#'.#&#%.08.-#,/08&-/8#8&.%$&0/#&/""8$##,0B&8/-,.+&
B.,08L&M$%$&7$&"/-)8&/0&#'$&,88)$&/"&%.:,/&,0#$%"$%$0-$L&C'$&,0.*,+,#2&/"&(%,9.#$&
(%/($%#2& %)+$8& #/& .:$@).#$+2& (/+,-$& 8($-#%)1& )8$5& +$.:,0B& #/& .& #%.B$:2& /"& #'$&
-/11/08&/)#-/1$5&'.8&#%.:,#,/0.++2&*$$0&.&8#.#$:&-/0-$%0&/"&%$B)+.#/%8L&&
60& Q).#$1.+.5& 7PL& '/+:$%8& 1.2& ",+$& .& "/%1.+& -/1(+.,0#& #/& #'$& H!75&
.--/1(.0,$:& *2& .& #$-'0,-.+& %$(/%#& (%/:)-$:& *2& .0& .--%$:,#$:& $I($%#5& ,0&
%$8(/08$&#/&%.:,/&,0#$%"$%$0-$L41&C'$&H!7&#'$0&,0"/%18&#'$&(.%#2&.++$B$:&#/&*$&
-%$.#,0B& #'$& %$(/%#$:& -/0"+,-#85& 7,#'& #'.#& (.%#2& B,9$0& #$0& :.28& #/& ",+$& ,#8& /70&
$I($%#& #$-'0,-.+& %$(/%#L& 3/++/7,0B& #',8& %$(+25& #'$& H!7& 1)8#& ,88)$& .& :$-,8,/0&
7,#',0&#$0&:.28L&6"&#'$&.--)8$:&'.8&9,/+.#$:&7PL&%,B'#85&#'$&(.%#2&1)8#&-$.8$&
#'$& ,0#$%"$%,0B& .-#,9,#,$8& .0:& (.2& .02& ",0$8& ,1(/8$:& *2& #'$& H!75& 7',-'& %.0B$&
"%/1&lZa5aaa&#/&lZaa5aaa542&7,#',0&",9$&:.28L43&&
g,#',0&#'$&1/*,+$&#$+$('/02&8$-#/%5&#'$%$&'.9$&*$$0&.+1/8#&0/&(%/*+$18&7,#'&
,0#$%"$%$0-$L& 3/%& $I.1(+$5& #'$& +.%B$8#& 1/*,+$& #$+$('/02& (%/9,:$%5& C$+B).5&
%$(/%#8& +,##+$& :,"",-)+#2& ,0& -//%:,0.#,0B& )8$& 7,#'& /#'$%& 7PL& '/+:$%8& .0:& '.8&
$0-/)0#$%$:& 9,%#).++2& 0/& ,++$B.+& )8$& /"& #'$,%& "%$@)$0-,$8L& p0& /0$& /--.8,/05&
'/7$9$%5&C$+B).&7.8&#'$&-.)8$&/"&,0#$%"$%$0-$&7'$05&."#$%&#'$&Z[[c&%$"/%15&,#&
-/0#,0)$:& #/& )8$& .& (/,0#f#/f(/,0#& #%.081,##$%& ,0& .& *.0:& "/%& 7',-'& ,#& :,:& 0/#&
'.9$& .& 7PLL& C'$& H!7& ,88)$:& .& l]a5aaa& ",0$j& C$+B).& (.,:& #'$& ",0$& .0:& -$.8$:&
/($%.#,/08&,0&#'$&*.0:L44&&
C',8&$(,8/:$&,++)8#%.#$8&'/7&#'$&%$8/+)#,/0&(%/-$88&,8&:$8,B0$:&#/&7/%AL&C'$&
*.0:&#'.#&C$+B).&)8$:&,++$B.++2&7.8&%$8$%9$:&"/%&B/9$%01$0#.+&)8$L&60&Z[[[5&#'$&
PLHL&B/9$%01$0#&,0#$0:$:&#/&)8$&#'$8$&"%$@)$0-,$8&,0&-/0m)0-#,/0&7,#'&8$-)%,#2&
:)%,0B& .& 9,8,#& *2& #'$0f(%$8,:$0#& J,++& 4+,0#/0L& C$8#,0B& #'$& *.0:& (%,/%& #/& #'$&
/"",-,.+&$9$0#5&PLHL&.)#'/%,#,$8&$I($%,$0-$:&,0#$%"$%$0-$&.0:&-/1(+.,0$:&#/&#'$&
H!75&7',-'&(%/1(#+2&,09$8#,B.#$:&.0:&$0m/,0$:&C$+B).L&&
!8& $+8$7'$%$5& *%/.:-.8#& 8($-#%)1& ,0& Q).#$1.+.& %$-$,9$8& 8($-,.+& #%$.#1$0#L&
C'$&%$+$9.0#&%$B)+.#,/08&7$%$&+.%B$+2&$8#.*+,8'$:&,0&#'$&<.:,/&4/11)0,-.#,/08&
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
kZ&U,1#C,",*0/#2,#7,/,(%$)"+(0(+%",&5&!%#L&]bL##
k`&U,1#C,",*0/#2,#7,/,(%$)"+(0(+%",&5&!%#L&\ZL&
kb&U,1#C,",*0/#2,#7,/,(%$)"+(0(+%",&5&!%#L&\kL&
kk&60#$%9,$7&7,#'&J$+,8.%,/&N/0#$($@)$5&4',$"&4/)08$+5&C$+B).L&Q).#$1.+.&4,#2&YD)0$&\5&`aa]_L&
Review of Law & Economics, © 2007 by bepress
&
Spectrum Liberalization in Guatemala and El Salvador / 467
U.7&/"&Z[ccL45&C',8&+.7&$8#.*+,8'$:&#'$&Q$0$%.+&E,%$-#/%.#$&"/%&J%/.:-.8#,0B5&
7',-'& .++/-.#$:& 8($-#%)1& )0#,+& #'$& #$+$-/11)0,-.#,/08& %$"/%1& ,0& Z[[c5& .0:&
7',-'&7.8&1.0.B$:&*2&#'$&Q).#$1.+.0&1,+,#.%2L&C'$&Q$0$%.+&E,%$-#/%.#$&"/%&
J%/.:-.8#,0B& 7.8& %$#.,0$:& "/++/7,0B& #'$& C$+$-/11)0,-.#,/08& U.7& /"& Z[[c5&
.+#'/)B'&,#&0/7&8'.%$8&%$8(/08,*,+,#2&"/%&8($-#%)1&%$B)+.#,/0&7,#'&#'$&H!7&.0:&
#'$&N,0,8#$%,/&?s*+,-/&YN,0,8#%2&/"&D)8#,-$_L46&&
3%/1&Z[[^&#/&1,:f`aa]5&#'$&H!7&%$(/%#8&#'.#&,#&'.8&%$-$,9$:&.&#/#.+&/"&`Z^&"/%1.+&
-/1(+.,0#8&/"&,0#$%"$%$0-$& Ye8-.+.0#$&`aa]_L&H$$&3,B)%$&^LZL&p"&#'$8$5&Z\Z&-.8$8&Y\k&
($%-$0#_& ($%#.,0& #/& #'$& KM3& *.0:5& .0:& Z]\& /"& #'$8$& Y^`L\& ($%-$0#& /"& .++&
,0#$%"$%$0-$&-/1(+.,0#8_&($%#.,0&#/&#'$&3N&%.:,/&*.0:8L&g,#'&#'$&$I-$(#,/0&/"&/0+2&
8$9$0& -.8$85& #'$& %$1.,0,0B& ,0#$%"$%$0-$& -/1(+.,0#8& ($%#.,0& #/& )8$& /"& #'$& PM3&
*.0:8& Y`[& -/1(+.,0#8_& Ye8-.+.0#$& `aa]_L& h/#& /0+2& .%$& #'$& %$(/%#$:& -.8$8&
-/0-$0#%.#$:&,0&#'$&3N&%.:,/&*.0:5&8/1$&7PL&'/+:$%8&7,#'&3N&"%$@)$0-,$8&-+.,1&
#'.#&#'$&(/8#f`aa`&:$-%$.8$&,0&#'$&0)1*$%&/"&H!7& -/1(+.,0#8&,8& .&%$8)+#&/"&#'$,%&
+.-A&/"&".,#'&,0&#'$&B/9$%01$0#W8&-/11,#1$0#&#/&%,B'#8&$0"/%-$1$0#&YU,)&`aa]_L&&&
Figure 7.1: Interference Complaints in Guatemala
Number of Complaints
80
69
70
60
50
50
40
33
31
30
19
20
10
8
0
1
1997
1998
6
0
&&
1999
2000
2001
2002
H/)%-$R&e8-.+.0#$&Y`aa]_&
2003
2004
2005
&
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&
468 / REVIEW OF LAW AND ECONOMICS
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'/+:$%85&$9$0&.8&1.02&,++$B.+&)8$%8&-/0#,0)$&#/&/($%.#$L&&
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.0:& .++/7& (/+,-2& 1.A$%8& #/& #'$%$*2& $0B.B$& ,0& %$0#f8$$A,0B& 9,.& S()*+,-& ,0#$%$8#X&
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7.2. EL SALVADOR
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Review of Law & Economics, © 2007 by bepress
&
Spectrum Liberalization in Guatemala and El Salvador / 469
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7.3. PUBLIC SECTOR
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&
470 / REVIEW OF LAW AND ECONOMICS
Figure 7.2: Number of Regulators vs. GDP
8.0
Log (Number of Regulators)
Brazil
7.0
Argentina
Mexico
Venezuela
6.0
Chile
Panama
5.0
4.0
Ecuador
Bolivia
Peru
Honduras
El Salvador
3.0
The simple regression
coefficient is 0.53.
Colombia
Guatemala
2.0
29
28
28
27
27
26
26
25
25
24
24
23
1.0
Log GDP ($)
8. CONCLUSION
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Review of Law & Economics, © 2007 by bepress
&
Spectrum Liberalization in Guatemala and El Salvador / 471
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&
472 / REVIEW OF LAW AND ECONOMICS
Appendix 1: Description of Data and Sources
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N/*,+$&E.#.5X&?2%.1,:&<$8$.%-'5&4.1*%,:B$5&N!&Y`aa]_L&NpP&($%&8)*8-%,*$%&%$(/%#$:&
.8&.&*+$0:&/"&(%$f(.,:&.0:&(/8#f(.,:&)8$&"/%5&.0:&#'$0&1)+#,(+,$:&*2&#'$&0)1*$%&/"&1/*,+$&
8)*8-%,*$%8& YH/)%-$R& g/%+:& E$9$+/(1$0#& 60:,-.#/%8& `aac5& g/%+:& J.0AR&&
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POPULATION: Source: World Development Indicators 2006, World Bank:
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2599~pagePK:64133170~piPK:64133498~theSitePK:239419,00.html
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4%$/0%!,2)05R&.0&,0:$I&9.+)$5&ZfZa5&1$.8)%$8&#'$&B$0$%.+&8$-)%,#2&/"&(%/($%#2&
%,B'#8L&H/)%-$R&Se-/0/1,-&3%$$:/1&/"&#'$&g/%+:&E.#.5X&`aac5&C'$&3%.8$%&608#,#)#$L&
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Review of Law & Economics, © 2007 by bepress
&
Spectrum Liberalization in Guatemala and El Salvador / 473
Appendix 2: OLS Regressions
Regression 1.1: Results
ln
Spectrum
GDPPC
Coefficient
(Std. Error)
t
P>t
Confidence
Interval
ln GDPPC
-0.5008
(0.0838)
-5.98
0.000
-0.6678
-0.3337
ln Fraser
0.2133
(0.3241)
0.66
0.513
-0.4327
0.8593
ln Population
0.0886
(0.0346)
2.56
0.012
0.0197
0.1576
ln Density
-1.0210
(0.2886)
-3.54
0.001
-1.5961
-0.4459
(ln Density)2
0.0868
(0.0420)
2.06
0.043
0.0030
0.1706
Liberal
1.2683
(0.1959)
6.4756
0.000
0.8778
1.6587
5.2771
(0.8616)
6.12
0.000
3.5599
6.9943
Constant
N=80; R-squared=0.7065
White's test for Ho: homoskedasticity:
chi2(25) = 76.58
Prob > chi2 = 0.0000
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
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&
474 / REVIEW OF LAW AND ECONOMICS
Regression 1.2: Results
ln HHI
Coefficient
(Std. Error)
t
P>t
Confidence
Interval
ln GDPPC
-0.3484
(0.0678)
-5.14
0.000
-0.4835
-0.2133
ln Fraser
0.4822
(0.2621)
1.84
0.070
-0.0402
1.0045
ln Population
-0.0495
(0.0280)
-1.77
0.081
-0.1053
0.0062
ln Density
0.7651
(0.2334)
3.28
0.002
0.3001
1.2302
(ln Density)2
-0.0692
(0.0340)
-2.04
0.045
-0.1370
-0.0015
Liberal
-0.8173
(0.1584)
-5.1657
0.000
-1.1330
-0.5015
6.5385
(0.6968)
9.38
0.000
5.1498
7.9271
Constant
N=80; R-squared=0.6253
White's test for Ho: homoskedasticity:
chi2(25) = 48.45
Prob > chi2 = 0.0033
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
]^&g,#'&%/*)8#&8#.0:.%:&$%%/%85&#&8#.#,8#,-&:$-%$.8$8&#/&f\Lkb&Y(f9.+)$waLaaa_L&
Review of Law & Economics, © 2007 by bepress
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Spectrum Liberalization in Guatemala and El Salvador / 475
Regression 1.3: Results
ln ARPM
Coefficient
(Std. Error)
t
P>t
Confidence
Interval
ln GDPPC
-0.1414
(0.1205)
-1.17
0.244
-0.3815
0.0987
ln Fraser
0.4310
(0.4659)
0.93
0.358
-0.4975
1.3595
ln Population
-0.1242
(0.0497)
-2.50
0.015
-0.2233
-0.0251
ln Density
-0.5139
(0.4148)
-1.24
0.219
-1.3406
0.3127
(ln Density)2
0.1224
(0.0604)
2.03
0.046
0.0020
0.2429
Liberal
-1.4176
(0.2816)
-5.0358
0.000
-1.9788
-0.8564
-1.4118
(1.2384)
-1.14
0.258
-3.8800
1.0563
Constant
N=80; R-squared=0.3907
White's test for Ho: homoskedasticity:
chi2(25) = 54.98
Prob > chi2 = 0.0005
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
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&
476 / REVIEW OF LAW AND ECONOMICS
Regression 1.4: Results
ln
MOU
GDPPC
Coefficient
(Std. Error)
t
P>t
Confidence
Interval
ln GDPPC
0.1054
(0.1613)
0.65
0.516
-0.2162
0.4269
ln Fraser
-0.8209
(0.6240)
-1.32
0.192
-2.0645
0.4227
ln Population
0.0210
(0.0666)
0.31
0.754
-0.1117
0.1537
ln Density
-0.1459
(0.5555)
-0.26
0.794
-1.2530
0.9613
(ln Density)2
-0.0290
(0.0809)
-0.36
0.721
-0.1904
0.1323
Liberal
1.5014
(0.3771)
3.9859
0.000
0.7498
2.2531
2.9444
(1.6587)
1.78
0.080
-0.3614
6.2502
Constant
N=80; R-squared=0.2623
White's test for Ho: homoskedasticity:
chi2(25) = 28.55
Prob > chi2 = 0.2832
Breusch-Pagan / Cook-Weisberg test for heteroskedasticity
(Ho:homoskedasticity):
chi2(1) = 3.70
Prob > chi2 = 0.0543
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
][&g,#'&%/*)8#&8#.0:.%:&$%%/%85&#&8#.#,8#,-&,0-%$.8$8&#/&]Lca&Y(f9.+)$waLaaa_L&
Review of Law & Economics, © 2007 by bepress
&
Spectrum Liberalization in Guatemala and El Salvador / 477
Regression 2.1: Results
ln
Spectrum
GDPPC
Coefficient
(Std. Error)
t
P>t
Confidence
Interval
ln GDPPC
-0.5041
(0.2402)
-2.10
0.065
-1.0475
0.0392
ln Fraser
0.3008
(1.0013)
0.30
0.771
-1.9643
2.5659
ln Population
0.0920
(0.0997)
0.92
0.380
-1.1336
0.3175
ln Density
-1.0047
(0.8235)
-1.22
0.253
-2.8677
0.8583
(ln Density)2
0.0846
(0.1200)
0.70
0.499
-0.1868
0.3560
Liberal
1.2667
(0.5562)
2.2860
0.049
0.0084
2.5250
5.0843
(2.5950)
1.96
0.082
-0.7860
10.9545
Constant
N=16; R-squared=0.7075
White's test for Ho: homoskedasticity:
chi2(25) = 16.00
Prob > chi2 = 0.3821
Breusch-Pagan / Cook-Weisberg test for heteroskedasticity
(Ho:homoskedasticity):
chi2(1) = 0.06
Prob > chi2 = 0.8000
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
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/"&.9$%.B,0B5&#'$&-/$"",-,$0#&"/%&U+A,*0/#$@).+8&ZL`c\b&7,#'&.&#&8#.#,8#,-&/"&]Lka&Y(f9.+)$waLaaa_L&
&
478 / REVIEW OF LAW AND ECONOMICS
Regression 2.2: Results
ln HHI
Coefficient
(Std. Error)
t
P>t
Confidence
Interval
ln GDPPC
-0.3418
(0.1396)
-2.45
0.037
-0.6575
-0.0261
ln Fraser
0.4215
(0.5818)
0.72
0.487
-0.8946
1.7376
ln Population
-0.0508
(0.0579)
-0.88
0.403
-0.1819
0.0802
ln Density
0.7420
(0.4785)
1.55
0.155
-0.3404
1.8245
(ln Density)2
-0.0650
(0.0697)
-0.93
0.376
-0.2226
0.0927
Liberal
-0.8366
(0.3232)
-2.5961
0.029
-1.5677
-0.1055
6.6706
(1.5078)
4.42
0.002
3.2598
10.0813
Constant
N=16; R-squared=0.7655
White's test for Ho: homoskedasticity:
chi2(25) = 16.00
Prob > chi2 = 0.3821
Breusch-Pagan / Cook-Weisberg test for heteroskedasticity
(Ho:homoskedasticity):
chi2(1) = 0.00
Prob > chi2 = 0.9931
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
cZ&g,#'&%/*)8#&8#.0:.%:&$%%/%85&#&8#.#,8#,-&:$-%$.8$8&#/&fbL[\&Y(f9.+)$waLaab_L&g,#'&-+)8#$%,0B&,08#$.:&
/"&.9$%.B,0B5&#'$&-/$"",-,$0#&"/%&U+A,*0/#$@).+8&faL\Z^b&7,#'&.&#&8#.#,8#,-&/"&f]La`&Y(f9.+)$waLaaa_L&
Review of Law & Economics, © 2007 by bepress
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Spectrum Liberalization in Guatemala and El Salvador / 479
Regression 2.3: Results
ln ARPM
Coefficient
(Std. Error)
t
P>t
Confidence
Interval
ln GDPPC
-0.1204
(0.2848)
-0.42
0.682
-0.7646
0.5239
ln Fraser
0.1123
(1.1872)
0.09
0.927
-2.5733
2.7980
ln Population
-0.1353
(0.1182)
-1.14
0.282
-0.4028
0.1321
ln Density
-0.5746
(0.9765)
-0.59
0.571
-2.7835
1.6343
(ln Density)2
0.1323
(0.1422)
0.93
0.377
-0.1895
0.4541
Liberal
-1.4351
(0.6595)
-2.1862
0.058
-2.9270
0.0568
-0.7418
(3.0768)
-0.24
0.815
-7.7020
6.2183
Constant
N=16; R-squared=0.4867
White's test for Ho: homoskedasticity:
chi2(25) = 16.00
Prob > chi2 = 0.3821
Breusch-Pagan / Cook-Weisberg test for heteroskedasticity
(Ho:homoskedasticity):
chi2(1) = 0.44
Prob > chi2 = 0.5087
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
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&
480 / REVIEW OF LAW AND ECONOMICS
Regression 2.4: Results
ln
MOU
GDPPC
Coefficient
(Std. Error)
t
P>t
Confidence Interval
ln GDPPC
0.0912
(0.3540)
0.26
0.803
-0.7096
0.8919
ln Fraser
-0.9971
(1.4757)
-0.68
0.516
-4.3354
2.3412
ln Population
0.0116
(0.1469)
0.08
0.939
-0.3208
0.3440
ln Density
-0.1431
(1.2137)
-0.12
0.909
-2.8887
2.6026
(ln Density)2
-0.0334
(0.1768)
-0.19
0.854
-0.4333
0.3666
Liberal
1.5742
(0.8198)
1.9263
0.087
-0.2803
3.4286
3.3559
(3.8244)
0.88
0.403
-5.2956
12.0073
Constant
N=16; R-squared=0.3943
White's test for Ho: homoskedasticity:
chi2(25) = 16.00
Prob > chi2 = 0.3821
Breusch-Pagan / Cook-Weisberg test for heteroskedasticity (Ho:homoskedasticity):
chi2(1) = 0.83
Prob > chi2 = 0.3636
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
cb&g,#'&%/*)8#&8#.0:.%:&$%%/%85&#&8#.#,8#,-&,0-%$.8$8&#/&cLcZ&Y(f9.+)$waLaaa_L&g,#'&-+)8#$%,0B&,08#$.:&
/"&.9$%.B,0B5&#'$&-/$"",-,$0#&"/%&U+A,*0/#$@).+8&ZL]aZk&7,#'&.&#&8#.#,8#,-&/"&^L]c&Y(f9.+)$waLaaa_L&
Review of Law & Economics, © 2007 by bepress
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Spectrum Liberalization in Guatemala and El Salvador / 481
Regression 3.1: Breusch-Pagan/Lagrange Multiplier Test Results
Breusch-Pagan / Lagrange Multiplier test for random effects (Ho:var(country)=0):
chi2(1) = 156.62
Prob > chi2 = 0.0000
Regression 3.2: Breusch-Pagan/Lagrange Multiplier Test Results
Breusch-Pagan / Lagrange Multiplier test for random effects (Ho:var(country)=0):
chi2(1) = 24.40
Prob > chi2 = 0.0000
Regression 3.3: Breusch-Pagan/Lagrange Multiplier Test Results
Breusch-Pagan / Lagrange Multiplier test for random effects (Ho:var(country)=0):
chi2(1) = 57.58
Prob > chi2 = 0.0000
Regression 3.4: Breusch-Pagan/Lagrange Multiplier Test Results
Breusch-Pagan / Lagrange Multiplier test for random effects (Ho:var(country)=0):
chi2(1) = 36.65
Prob > chi2 = 0.0000
&
482 / REVIEW OF LAW AND ECONOMICS
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e9,:$0-$&"%/1&4/)0#%2f?.,%&E.#.5X&ka!]%)*"0/#%4#!"2)&'*+0/#G(%"%$+(&&ba]L&
!)8#%.+,.0& ?%/:)-#,9,#2& 4/11,88,/0L& `aa`L& B02+%(%$$)"+(0'+%"&Y# !"^)+*1# B,5%*'5& <$(/%#&
h/L&``&YD)+2&Z_L&
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Spectrum Liberalization in Guatemala and El Salvador / 483
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484 / REVIEW OF LAW AND ECONOMICS
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Review of Law & Economics, © 2007 by bepress
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