Abstract

http://ssrn.com/abstract=261064
 
 

Citations (3)



 
 

Footnotes (2)



 


 



Second-price Auctions with Power-Related Distributions


Luke Froeb


Vanderbilt University - Strategy and Business Economics

Steven Tschantz


Vanderbilt University - Department of Mathematics

Philip Crooke


Vanderbilt University - Department of Mathematics

February 21, 2001


Abstract:     
We analyze a class of parametric second-price auction models where asymmetry is modeled by allowing bidders to take different numbers of draws from the same distribution. We compute the closed-form distribution of price and construct likelihood and method-of-moments estimators to recover the underlying value distribution from observed prices. We derive a Herfindahl-like formula that predicts merger effects and find that merger effects depend on the shares of the merging bidders, the variance, and the "shape" of the distribution. We generalize the model by allowing bidders to mix over power-related distributions. The dominant strategy equilibrium implies that an auction among bidders who mix over distributions can be expressed as a mixture of auctions. This implies that an auction among bidders with potentially correlated values can be expressed as a mixture over independent power-related auctions.

Number of Pages in PDF File: 30

Keywords: Second-price, private-values auctions, merger, antitrust

JEL Classification: D44, C50, L41

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Date posted: March 14, 2001  

Suggested Citation

Froeb, Luke and Tschantz, Steven and Crooke, Philip, Second-price Auctions with Power-Related Distributions (February 21, 2001). Available at SSRN: http://ssrn.com/abstract=261064 or http://dx.doi.org/10.2139/ssrn.261064

Contact Information

Luke M. Froeb (Contact Author)
Vanderbilt University - Strategy and Business Economics ( email )
Nashville, TN 37203
United States
615-322-9057 (Phone)
615-343-7177 (Fax)

Steven T. Tschantz
Vanderbilt University - Department of Mathematics ( email )
Nashville, TN 37240
United States
Philip Crooke
Vanderbilt University - Department of Mathematics ( email )
Nashville, TN 37240
United States
615-322-6671 (Phone)
615-322-0215 (Fax)
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