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On the asymptotic distribution of the transaction price in a clock model of a multi-unit, oral, ascending-price auction within the common-value paradigm

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  • Han Hong
  • Harry J. Paarsch
  • Pai Xu

Abstract

type="main"> Using a clock model of a multi-unit, oral, ascending-price auction, within the common-value paradigm, we analyze the behavior of the transaction price as the numbers of bidders and units gets large in a particular way. We find that even though the transaction price is determined by a fraction of losing drop-out bids, that price converges in probability to the true, but ex ante unknown, value. Subsequently, we demonstrate that the asymptotic distribution of the transaction price is Gaussian. Finally, we apply our methods to data from an auction of taxi license plates held in Shenzhen, China.

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  • Han Hong & Harry J. Paarsch & Pai Xu, 2013. "On the asymptotic distribution of the transaction price in a clock model of a multi-unit, oral, ascending-price auction within the common-value paradigm," RAND Journal of Economics, RAND Corporation, vol. 44(4), pages 664-685, December.
    • Handle: RePEc:bla:randje:v:44:y:2013:i:4:p:664-685
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    File URL: http://hdl.handle.net/10.1111/1756-2171.12034
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    References listed on IDEAS

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    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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