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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
Author(s) -
Cable John,
Henley Andrew,
Holland Kevin
Publication year - 2002
Publication title -
fiscal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.63
H-Index - 40
eISSN - 1475-5890
pISSN - 0143-5671
DOI - 10.1111/j.1475-5890.2002.tb00068.x
Subject(s) - curse , winner's curse , mobile telephone , common value auction , event study , economics , ordinary least squares , event (particle physics) , estimation , microeconomics , econometrics , engineering , sociology , paleontology , context (archaeology) , anthropology , electrical engineering , biology , physics , quantum mechanics , management
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.