Asymmetry in first-price auctions with affiliated private values

Sandra Campo, Isabelle Perrigne, Quang Vuong

    Research output: Contribution to journalArticle

    Abstract

    Collusion and heterogeneity across firms may introduce asymmetry in bidding games. A major difficulty in asymmetric auctions is that the Bayesian Nash equilibrium strategies are solutions of an intractable system of differential equations. We propose a simple method for estimating asymmetric first-price auctions with affiliated private values. Considering two types of bidders, we show that these differential equations can be rewritten using the observed bid distribution. We establish the identification of the model, characterize its theoretical restrictions, and propose a two-step non-parametric estimation procedure for estimating the private value distributions. An empirical analysis of joint bidding in OCS auctions is provided.

    Original languageEnglish (US)
    Pages (from-to)179-207
    Number of pages29
    JournalJournal of Applied Econometrics
    Volume18
    Issue number2
    DOIs
    StatePublished - Mar 2003

    ASJC Scopus subject areas

    • Social Sciences (miscellaneous)
    • Economics and Econometrics

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