Question 3 {ti- pointsl It is the start of the mobile phone era. The Australian government is selling "mobile phone spectrum\": A mobile phone company that wants its customers to be able to send and receive mobile phone signals in Sydney must buy the right to sendfreceive signals on spectrum in the Sydney area. The government is selling only 1 license for Sydney and 1 for Brisbane, and no other licenses will ever be sold. The government incurs no costs in providing a license, so its WTS is D. Imagine that there are only two populated locations in Australia, Sydney and Brisbane, and two mobile phone companies. - Telstra will have 2 million customers if it has coverage in Sydney and in Brisbane, because customers will get a lot of utility from being able to use their mobile phones in both cities. [For instance, Sydney residents enjoy being able to use their mobile phones in Brisbane when they travel to Brisbane for work or for holidays] But Telstra will have 1 million customers if it has coverage in Sydney only, and S if it has coverage in Brisbane only. - Dptus will have 1.5 million customers if it has coverage in Sydney and Brisbane, because customers will get a lot of utility from being able to use their mobile phones in boih cities. Uptus will have S customers if it has coverage in Sydney only, and ?I]I],I][l customers if it has coverage in Brisbane onlymost of the interest in Dptus is from Brisbane residents. Each company earns $? per customer, in present value. It is 1994, and currently no mobile phone towers have been built. a] The government sits down with Telstra and Dptus, and the three of them negotiate over these licenses. Who gets the Brisbane license? 1Who gets the Sydney license? [Both licenses can go to the same rm, or the licenses can go to different rms] Show your calculations. b] What is the range of possible payments to the government from these negotiations