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Asymmetry in first-price auctions with affiliated private values

Author

Listed:
  • Quang Vuong

    (University of Southern California, Department of Economics, Los Angeles, CA 90089-0253, USA)

  • Sandra Campo

    (University of North Carolina, Department of Economics, Chapel Hill, NC 27599-3305, USA)

  • Isabelle Perrigne

    (University of Southern California, Department of Economics, Los Angeles, CA 90089-0253, USA)

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. Copyright © 2003 John Wiley & Sons, Ltd.

Suggested Citation

  • Quang Vuong & Sandra Campo & Isabelle Perrigne, 2003. "Asymmetry in first-price auctions with affiliated private values," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(2), pages 179-207.
    • Handle: RePEc:jae:japmet:v:18:y:2003:i:2:p:179-207
    DOI: 10.1002/jae.697
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    References listed on IDEAS

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