Sequential Auctions with Synergy and Affiliation across Auctions

Yunmi Kong

Journal of Political Economy, 2021, vol. 129, issue 1, 148 - 181

Abstract: This paper performs a structural analysis of sequential auctions with both synergy and affiliation across auctions. I propose a flexible yet tractable sequential auction model under the private value paradigm and establish its nonparametric identification, demonstrating an intuitive and general method for disentangling synergy from affiliation. After developing an estimation procedure closely tied to the identification steps, I apply it to data on adjacent oil and gas leases that are auctioned sequentially. I assess the role played by affiliation versus synergy in the observed allocation patterns and evaluate the counterfactual policy of bundled auctions.

Date: 2021
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