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Complements and Substitutes in Sequential Auctions: The Case of Water Auctions

Javier Donna and Jose Espin-Sanchez

MPRA Paper from University Library of Munich, Germany

Abstract: We use data on sequential water auctions to estimate demand when units are com- plements or substitutes. A sequential English auction model determines the estimating structural equations. When units are complements, one bidder wins all units by paying a high price for the first unit, thus deterring others from bidding on subsequent units. When units are substitutes, different bidders win the units with positive probability, paying prices similar in magnitude, even when the same bidder wins all units. We re- cover individual demand consistent with this stark pattern of outcomes and confirm it is not collusive, but consistent with non-cooperative behavior. Demand estimates are biased if one ignores these features.

Keywords: Auctions; Structural Demand Estimation; Market Structure; Competition; Collusion (search for similar items in EconPapers)
JEL-codes: C13 D44 L10 L40 (search for similar items in EconPapers)
Date: 2014-02-17
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/55079/1/MPRA_paper_55079.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/66997/8/MPRA_paper_66997.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/77151/8/MPRA_paper_66997.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/77151/15/MPRA_paper_77151.pdf revised version (application/pdf)

Related works:
Working Paper: Complements and Substitutes in Sequential Auctions: The Case of Water Auctions (2018) Downloads
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