Structural Analysis of Ascending Auctions: an Application to Wholesale Used-car Auctions

With the availability of a rich data set, we will develop a new method of conducting structural analysis of ascending auctions under the simplest valuation paradigm, the symmetric IPV model. The data set allows us to adopt a nonparametric approach and make strong interpretation of observed bids, including losing bids, while making a few assumptions about bidding behavior of the model. IdentiÂ…cation and estimation are based on the recent work by Song (2003) that we extend by using one more order statistics and developing better procedure to control auction heterogeneity. We then implement nonparametric tests by Athey and Haile (2002)