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Pot of gold or winner's curse? An event study of the auctions of 3G mobile telephone licences in the UK

Pot of gold or winner's curse? An event study of the auctions of 3G mobile telephone licences in the UK
Pot of gold or winner's curse? An event study of the auctions of 3G mobile telephone licences in the UK
Commentators have suggested that the winning companies in the UK 3G mobile telephone auction overpaid for their licences. However, event-study method using the market model under ordinary least squares (OLS), robust and structural time-series estimation yields no systematic evidence of the 'winner's curse'. Positive as well as negative one-day wealth effects are observed amongst both winners and losers, and there is no lasting adverse market reaction to the winners, taken as a group. We conclude there is no case for easing the regulatory stance in the industry on grounds that the winners paid too much.
winner's curse, 3g licence auction
0143-5671
447-462
Cable, John
18b70f60-a855-47e4-a0d1-416151a8dc00
Henley, Andrew
808182e2-a8a0-4dc2-96a3-1bf102c5431e
Holland, Kevin
91511fcc-a84b-44b6-98ee-13b6ebde71da
Cable, John
18b70f60-a855-47e4-a0d1-416151a8dc00
Henley, Andrew
808182e2-a8a0-4dc2-96a3-1bf102c5431e
Holland, Kevin
91511fcc-a84b-44b6-98ee-13b6ebde71da

Cable, John, Henley, Andrew and Holland, Kevin (2002) Pot of gold or winner's curse? An event study of the auctions of 3G mobile telephone licences in the UK. Fiscal Studies, 23 (4), 447-462. (doi:10.1111/j.1475-5890.2002.tb00068.x).

Record type: Article

Abstract

Commentators have suggested that the winning companies in the UK 3G mobile telephone auction overpaid for their licences. However, event-study method using the market model under ordinary least squares (OLS), robust and structural time-series estimation yields no systematic evidence of the 'winner's curse'. Positive as well as negative one-day wealth effects are observed amongst both winners and losers, and there is no lasting adverse market reaction to the winners, taken as a group. We conclude there is no case for easing the regulatory stance in the industry on grounds that the winners paid too much.

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Published date: December 2002
Keywords: winner's curse, 3g licence auction

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Local EPrints ID: 45632
URI: http://eprints.soton.ac.uk/id/eprint/45632
ISSN: 0143-5671
PURE UUID: 8a89fcd9-2370-4079-b50c-cacb2064bd22

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Date deposited: 18 Apr 2007
Last modified: 24 Apr 2020 16:34

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Author: John Cable
Author: Andrew Henley
Author: Kevin Holland

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