Affiliation and Entry in First-Price Auctions with Heterogeneous Bidders: An Analysis of Merger Effects

Tong Li and Bingyu Zhang

American Economic Journal: Microeconomics, 2015, vol. 7, issue 2, 188-214

Abstract: We study the effects of mergers in timber sale auctions in Oregon. We propose an entry and bidding model within the affiliated private value (APV) framework and with heterogeneous bidders, and establish existence of the entry equilibrium and existence and uniqueness of the bidding equilibrium when the joint distribution of private values belongs to the class of Archimedean copulas. We estimate the resulting structural model, and study merger effects through counterfactual analyses using the structural estimates. We evaluate how merger effects depend on affiliation, entry, and the auction mechanism and find that the seller may benefit from some mergers. (JEL C57, D44, G34, L11, L73)

JEL-codes: C57 D44 G34 L11 L73 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/mic.20110106
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Citations: View citations in EconPapers (22)

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