An Estimable Demand System for a Large Auction Platform Market

Greg Lewis and Matthew Backus

Department of Economics, Working Paper Series from Department of Economics, Institute for Business and Economic Research, UC Berkeley

Abstract: Economists have developed a range of empirically tractable demand systems for fixed price markets. But auction mechanisms also play an important part in allocating goods, and yet existing empirical auction techniques treat each auction in isolation, obscuring market interactions. Here we provide a framework for estimating a demand system in a large auction platform market with a dynamic population of buyers, heterogeneous objects and unit demand. We construct a model of repeated second-price auctions in which bidders have multidimensional private valuations, developing an equilibrium concept under which strategies reflect option values. We prove existence of this equilibrium and characterize the ergodic distribution of types. Having developed a demand system, we show that it is non-parametrically identified from panel data. Relatively simple nonparametric and semiparametric estimation procedures are proposed and tested by Monte Carlo simulation. Our analysis highlights the importance of both dynamic bidding strategies and panel data sample selection issues when analyzing these markets.

Date: 2009-11-06
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.escholarship.org/uc/item/8vk5j2kr.pdf;origin=repeccitec (application/pdf)

Related works:
Working Paper: An Estimable Demand System for a Large Auction Platform Market (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cdl:econwp:qt8vk5j2kr

Access Statistics for this paper

More papers in Department of Economics, Working Paper Series from Department of Economics, Institute for Business and Economic Research, UC Berkeley Contact information at EDIRC.
Bibliographic data for series maintained by Lisa Schiff ().