What should comcast bid in this auction

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Reference no: EM133637236

Question

Sky is a European pay-TV juggernaut that is looking to sell to a global buyer. Comcast and 21st Century Fox are two frontunners, and they are bidding in a first-price, sealed-bid auction. Suppose that Comcast values Sky at $50 billion and 21st Century Fox values it at $40 billion. Suppose that both companies believe that the probability of winning the auction is 10 where is the bid.

1. What should Comcast bid in this auction?

2. What should 21st Century Fox bid in this auction?

3. How should Comcast and 21st Century Fox bid if this were a second-price auction?

Reference no: EM133637236

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