1 / 5

Headline: Winners of wireless auction to pay $7 billion

Headline: Winners of wireless auction to pay $7 billion. “The Federal Gov’t completed the biggest auction in history today, selling off part of the nation’s airwaves for $7 billion to a handful of giants companies…” The CEO of a regional telephone company wants to purchase an FCC license.

piera
Download Presentation

Headline: Winners of wireless auction to pay $7 billion

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Headline: Winners of wireless auction to pay $7 billion “The Federal Gov’t completed the biggest auction in history today, selling off part of the nation’s airwaves for $7 billion to a handful of giants companies…” The CEO of a regional telephone company wants to purchase an FCC license.

  2. Headline: Winners of wireless auction to pay $7 billion • population is 7% greater than the average • same number of licenses • in the most recent auction: 99 bidders – an average of $70.7 million for a single license • log(P) = 2.23 – 1.2log(Q) + 1.25log(Pop) How much money does the CEO expects his company will need to buy a license? How much confidence do you place in this estimate?

  3. Answering the headline • log(P) = 2.23 – 1.2log(Q) + 1.25log(Pop) • log-linear regression  1.25 = %P/7 %P = 8.75  the expected price needed to win is $76.9 million

  4. Answering the headline • R-squared = 0.85 • F-statistic indicates that the regression is highly significant (at the .13 percent level) • |t-statistics| > 2, with P-values < 5% … thus the true coefficients are different from zero and reasonably close to the estimated ones.

  5. Answering the headline However, • the upper bound of the 95% confidence interval for log(P) is 1.73, the CEO can be 95% confident that $79.3 million will be enough to win the license. (Why?) • should exercise caution in using these estimates: need to know regional income, number of bidders

More Related