Ultimatum Game, Loss Aversion, and Status Quo Bias in Action: The Case of Privatization of PCCW

In 2008, Pacific Century Regional Development and China Netcom Corporation, two major shareholders of Pacific Century Cyber Works (PCCW, 00008.hk), proposed privatization of the firm listed in Hong Kong Stock Exchange. Minority shareholders opposed fiercely. The proposal, although endorsed in special shareholders meeting in February 2009, was challenged in Court and overturned, due to allegations of vote-rigging in the shareholders meeting. One interesting aspect of this episode is that, while the offer by major shareholders was very attractive compare to the current share price, it is hard to understand why relatively large percentage of shareholders voted against the offer. The percentage deviates from what often found in ultimatum game experiments, as the offer proposed by the major shareholders was comparable to the median offers in a lot of ultimatum game experiments. This could be understood through loss aversion, which predict a bias towards status quo

Network neutrality: Hong Kong's perspectives

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Impact of prefix hijacking on payments of providers

Abstract—Whereas prefix hijacking is usually examined from security perspectives, this paper looks at it from a novel economic angle. Our study stems from an observation that a transit AS (Autonomous System) has a financial interest in attracting extra traffic to the links with its customers. Based on real data about the actual hijacking incident in the Internet, we conduct simulations in the real AS-level Internet topology with synthetic demands for the hijacked traffic. Then, we measure traffic on all inter-AS links and compute the payments of all providers. The analysis of our results from technical, business, and legal viewpoints suggests that hijacking-based traffic attraction is a viable strategy that can create a fertile ground for tussles between providers. In particular, giant top-tier providers appear to have the strongest financial incentives to hijack popular prefixes and then deliver the intercepted traffic to the proper destinations. We also discuss directions for future research in the area of hijacking-based traffic attraction

Traces of desire and fantasy : the government-generated discourse on technology in post-handover Hong Kong

Information technology almost became the savior for Hong Kong in the process of recovering from the Asian financial crisis immediately after the Handover. The claims to establish and further the development of information technology were made against a certain perception of Hong Kong, in which the place in past decades had indulged in the wrong direction of labour-intensive, cut-throat production in the manufacturing industries and bubble-like speculation in the real-estate sector, and against a certain vision of the future, with more and more competition in the age of globalization, neo-liberal economies, and so on. This thesis demonstrates, firstly, how the governance of Hong Kong can be seen from the perspective of contingent articulations of dissimilar elements rather than any step-by-step progression along any necessary, objective historical path. Secondly through analyses of the governmental discourses and the business trajectory of Pacific-Century CyberWorks, the flagship group for Hong Kong’s “new-economy”, the thesis depicts the complexity and nexus of knowledge, governance, bureaucratic and financial considerations of and within the project of information technology in Hong Kong, and the mechanism by which this particular discourse is produced and circulated. Finally, comparing the discourse of Hong Kong’s early industralisation in the early 1950s, the thesis identifies the desire-creating workings of ideology in this particular discourse of information technology in Hong Kong. Also, through theoretical prisms, the thesis provides examples of how the government’s trumpeted notions of (and, probably, people’s faith in) laissez-faire, positive non-intervention are able to coexist in apparent harmony with the highly active participation of the Hong Kong SAR government in society and industry

Consumer protection in the Hong Kong telecommunications sector : implications for competition policy

Competition policy is meant to ensure a level-playing in the market, but its ultimate goal is to enhance consumer interests. The telecommunications sector is one of the two sectors that have set up a competition policy in Hong Kong. This paper examines the current competition policy framework in the telecommunications sector by analyzing the level of consumer protection using the Structure-Conduct-Performance Paradigm. It examines in detail the consumer related complaint cases received by the Office of the Telecommunications Authority in four markets: fixed line telephone services, mobile phone services, International Direct Dialing services, and Internet services. Regression analysis results reveal that more competition in a market has a positive and significant effect on the frequency of complaints about misleading or deceptive conduct on the part of operators in the period from 1999 to 2006. Also, smaller and newer operators tend to receive more complaints. From the lessons we have drawn from the telecommunications sector, a more comprehensive policy coped with consumer protection regulation is needed in order to better promote consumer interests in Hong Kong

A History of Competition: The Impact of Antitrust on Hong Kong’s Telecommunications Markets

Hong Kong has only had cross-sector competition law since 2015, but the city’s telecommunications markets have been subject to sector-specific antitrust provisions for over two decades. The importance of nurturing an efficient, innovative, and competitive telecoms industry for Hong Kong’s economic prosperity was acknowledged already at the time the sector was liberalized in the 1990s. Yet until the late 2000s, the government vehemently opposed the adoption of competition law in virtually all other sectors of the economy. This paper examines the effectiveness of the regulatory framework set up to guarantee the protection of competition in the telecommunications sector in Hong Kong. The results of the liberalization process are certainly remarkable, and the city boasts very competitive telecoms markets. However, it is argued that the enthusiasm over the results of the liberalization process may have eclipsed important competition issues in local markets, which could have been tackled through the development of a robust antitrust policy, but which were sadly left unheeded. On the basis of the analysis of the history of (sector-specific) competition law in the telecoms sector, this Article assesses the potential of the new Competition Ordinance to address the principal threats to competition in these markets. In doing so, the paper finds that, while the new regulatory framework may be generally suitable to combat collusion, it is less clear that it will effectively combat the problems associated with the creation of market power through mergers, or the abuse of that power

A case study on the merger of Pacific Century Cyberworks Ltd and Cable & Wireless HKT Ltd.

by Lee Ka Wing, Liu Chi Ngai.Thesis (M.B.A.)--Chinese University of Hong Kong, 2001.Includes bibliographical references (leaves 46-47).ABSTRACT --- p.iTABLE OF CONTENTS --- p.iiChapterChapter I. --- INTRODUCTION --- p.1Chapter II. --- COMPANY BACKGROUND --- p.3Pacific Century CyberWorks Limited --- p.3History --- p.3Major Business --- p.5Performance --- p.7Management of PCCW --- p.8Shareholdings Distribution (Prior to the merger) --- p.9Cable & Wireless HKT --- p.9History --- p.10Major business --- p.11Performance --- p.11Shareholdings Distribution (Prior to the merger) --- p.13Chapter III. --- REASONS FOR THE ACQUISITION --- p.14Chapter IV. --- MAJOR EVENTS --- p.17Competitive bid by SingTel --- p.17Arrangement for the USS12 billion loan --- p.18The Composite Document --- p.19Stories Behind the Offers (Prior to the Mergcr) --- p.20Probable strategy of C&W behind the acceptance --- p.21Chapter V. --- FINANCING PACKAGE --- p.24PCCW Equity Funding --- p.24PCCW Loan Funding --- p.25Chapter VI. --- ANALYSIS ON THE EFFECTS OF CORPORATE ANNOUNCEMENTS --- p.27Market Efficiency --- p.27Methodology --- p.28Announcements --- p.29Chapter VII. --- AFTERMATH --- p.31Financial Ferformance --- p.31What Went Wrong? --- p.32Economic and Corporate Governance --- p.34APPENDIX --- p.39BIBLIOGRAPHY --- p.4

Cables, Sharks and Servers: Technology and the Geography of the Foreign Exchange Market

We analyze the impact of technology on production and trade in services, focusing on the foreign exchange market. We identify exogenous technological changes by the connection of countries to submarine fiber-optic cables used for electronic trading, but which were not laid for purposes related to the foreign exchange market. We estimate the impact of cable connections on the share of offshore foreign exchange transactions. Cable connections between local markets and matching servers in the major financial centers lower the fixed costs of trading currencies and increase the share of currency trades occurring onshore. At the same time, however, they attenuate the effect of standard spatial frictions such as distance, local market liquidity, and restrictive regulations that otherwise prevent transactions from moving to the major financial centers. Our estimates suggest that the second effect dominates. Technology dampens the impact of spatial frictions by up to 80 percent and increases, in net terms, the share of offshore trading by 21 percentage points. Technology also has economically important implications for the distribution of foreign exchange transactions across financial centers, boosting the share in global turnover of London, the world’s largest trading venue, by as much as one-third