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An event study of the first telecommunications spectrum auction in Korea and "the winner's curse"


  • Lee, Hyeongjik
  • Seol, Seong-ho
  • Kweon, Soo Cheon


The first telecommunications spectrum auction in Korea is attention worthy due to the fierce competition for only the 1.8 GHz spectrum band and the winning bidder was suspected of overpaying for acquiring the spectrum licence. This study empirically investigates the existence of winner's curse in the Korean spectrum auction by using standard event study methodology. The results showed that both the winner and the loser experienced significant positive return on the completion day of the auction. It implies that there is no winner's curse and the losing firm may actually increase its competitive advantage by acquiring the secondbest spectrum though failing to achieve its initial objective. Therefore, these results suggest that regulators may need to consider bringing positive short-term wealth benefits for all bidders by designing the spectrum auctopm appropriately such as performing multi-band auctions.

Suggested Citation

  • Lee, Hyeongjik & Seol, Seong-ho & Kweon, Soo Cheon, 2012. "An event study of the first telecommunications spectrum auction in Korea and "the winner's curse"," 23rd European Regional ITS Conference, Vienna 2012 60394, International Telecommunications Society (ITS).
  • Handle: RePEc:zbw:itse12:60394

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    References listed on IDEAS

    1. Gerpott, Torsten J. & Jakopin, Nejc M., 2007. "Firm and target country characteristics as factors explaining wealth creation from international expansion moves of mobile network operators," Telecommunications Policy, Elsevier, vol. 31(2), pages 72-92, March.
    2. John Cable & Andrew Henley & Kevin Holland, 2002. "Pot of gold or winner's curse? An event study of the auctions of 3G mobile telephone licences in the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 23(4), pages 447-462, December.
    3. Gary Madden & Ismail Saglam & Aaron Morey, 2010. "Auction Design and the Success of National 3G Spectrum Auctions," Working Papers 1002, TOBB University of Economics and Technology, Department of Economics.
    4. Trillas, Francesc, 0. "Mergers, acquisitions and control of telecommunications firms in Europe," Telecommunications Policy, Elsevier, vol. 26(5-6), pages 269-286, June.
    5. Freyens, Benoît Pierre & Yerokhin, Oleg, 2011. "Allocative vs. technical spectrum efficiency," Telecommunications Policy, Elsevier, vol. 35(4), pages 291-300, May.
    6. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
    7. Hwang, Junseok & Yoon, Hyenyoung, 2009. "A mixed spectrum management framework for the future wireless service based on techno-economic analysis: The Korean spectrum policy study," Telecommunications Policy, Elsevier, vol. 33(8), pages 407-421, September.
    8. Kwon, Youngsun & Lee, Jungsub & Oh, Youngkyun, 2010. "Economic and policy implications of spectrum license fee payment methods," Telecommunications Policy, Elsevier, vol. 34(3), pages 175-184, April.
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    spectrum auction; winner's curse; event study; 4 G spectrum;

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