Yuri asks whether spectrum allocation systems "create rents." He does not make it clear whether (1) the purpose of the systems is to create private property rights where, otherwise, there would be common property and therefore an externality problem or (2) the purpose is to benefit some special interest group. Polly seems to be assuming the latter. I will assume the former. The question thus interpreted, it seem to me, is a sub-question of a larger question of whether establishing private property rights creates rents. What it creates, it seems to me, are opportunities to earn profit -- or perhaps higher profit than otherwise. Some people are better positioned than others to earn profit by owning a license. Under an auction system and under the usual simplifying assumptions, they will win the bids for licenses if they can get financing. These winners expect to earn profit on the difference between their appraisal of the licence's value and the appraisal of the next highest bidders who do not win. The same principle would apply to a government that privatizes land that it previously reserved for "public use" or for non-use. There are rents, in a sense. Or they are taxes. But whatever they are, they disappear immediately when the auction is over. If the government made a policy of take them again, it would destroy the incentive to bid. Just as rents on privatized government-owned land would disappear as soon as the auction of the land was over. This suggests that the confusion of the Georgists is between (1) some original value which was captured so long ago that it is unidentifiable today and (2) today's land price. One might claim that there is a sense in which today's price reflects that captured price. But such a claim is irrelevant to an effort today to tax some unearned increment. It has already done been captured and the people who captured are most likely at least six feet under. By all rights, the revenue from creating property rights in the spectrum should go to the smarty who thought up the system. But it is difficult to appropriate such rents and to give them to the smarties unless the smarties are aligned with an autocratic government. In any case, to the entrepreneurs who pay for the licenses, these "rents" are merely costs of production. Best wishes Pat Gunning