This study investigates the economic effects that may be expected from the introduction of an indirect access (IA) scheme, a potentially effective tool for stimulating competition, into Korea's mobile market. We estimate the changes in consumer surplus and operator's net revenues attributable to the IA system, using actual or estimated market data such as the price elasticity, call traffics, prices and interconnection charges, combined with some competition scenarios. Our results suggest that the increase of consumer surplus by the introduction of an IA scheme would be sizeable, regardless of its type and that is largest under the scheme access charge is regulated on cost-plus basis and mandated for Significant Market Power (SMP) only to provide interconnection service if IA providers (IAP) request.

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The first spectrum auction in the Republic of Korea is attention‐worthy owing to the fierce competition for the only 1.8‐GHz spectrum license, the winning bidder of which was suspected of overpaying for its acquisition. This study empirically investigates the existence of a “winner's curse” in the first Korean spectrum auction by using a standard event study methodology. The results show that both the winner and loser experienced significant positive returns on the completion day of the auction. The results imply that there was no winner's curse in the auction and that the losing firm might increase its competitive advantage by acquiring other spectrum licenses despite failing to achieve its initial target spectrum. Therefore, these results suggest that regulators may need to consider bringing about positive short‐term wealth benefits to all bidders by appropriately designing a spectrum auction, such as by performing multiband auctions.

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