first price auction implements efficient investments abstract this note shows that the first price auction fully implements efficient investments when agents make not only ex ante but also ex post investments the essential assumptions of our model are that i each agent can invest before and after participating in the auction under the same cost function and ii the cost functions are common knowledge among agents in any equilibrium of our model the most efficient agent always wins and makes the efficient level of investment

sequential auctions price trends and risk preferences abstract we analyze sequential auctions in a general environment where bidders are heterogeneous in risk exposures and exhibit non quasilinear utilities we derive a pure strategy symmetric equilibrium for the sequential dutch and vickrey auctions respectively with an arbitrary number of identical objects for sale when bidders are risk averse preferring the equilibrium price sequences must be downward upward drifting the declining price anomaly is thus evidence of bidder risk aversion in this general environment these results derive from a key assumption that bidders marginal utilities are log supermodular in payment and type

investigating bid preferences at low price sealed bid auctions with endogenous participation abstract at procurement auctions with bid preferences qualified firms are treated special a common policy involves scaling the bids of preferred firms by a discount factor for the purposes of evaluation only introducing such an asymmetry has three effects first preferred firms may inflate their bids yet still win the auction second nonpreferred firms may bid more aggressively than in the absence of preferences third the preference policy can affect participation for different cost distributions we solve numerically for the equilibrium bid functions under different discounts and then simulate behaviour our approach allows us to quantify the relative importance of the three effects we find that the participation effect is relatively unimportant and in most cases a positive cost minimizing preference rate exists download download video 34mb video 1

on the existence of pure strategy monotone equilibria in asymmetric first price auctions we establish the existence of pure strategy equilibria in monotone bidding functions in first price auctions with asymmetric bidders interdependent values and affiliated one dimensional signals by extending a monotonicity result due to milgrom and weber 1982 we show that single crossing can fail only when ties occur at winning bids or when bids are individually irrational we avoid these problems by considering limits of ever finer finite bid sets such that no two bidders have a common serious bid and by recalling that single crossing is needed only at individually rational bids two examples suggest that our results cannot be extended to multidimensional signals or to second price auctions

electricity demand response to price changes the portuguese case taking into account income differences abstract in this paper we study the behavior of electricity use in portuguese households using microdata from five independent surveys our sample covers the period from 1989 to 2010 which was characterized by major changes in the country we adopt the pseudo panel methodology creating 350 cohorts based on the size of the household the type of location rural or urban the region and the income quintile our results show relatively high medium long run own price elasticities indicating that an increase in the electricity price due to for instance policy intervention would in fact decrease electricity use cross price elasticities indicate that electricity and gas are substitutes additionally the income quintiles analysis shows significant differences in the elasticities depending on the income group hence political interventions in the electricity sector may have important redistributive effects

existence of equilibrium in single and double private value auctions we show existence of equilibria in distributional strategies for a wide class of private value auctions including the first general existence result for double auctions the set of equilibria is invariant to the tie breaking rule the model incorporates multiple unit demands all standard pricing rules reserve prices entry costs and stochastic demand and supply valuations can be correlated and asymmetrically distributed for double auctions we show further that at least one equilibrium involves a positive volume of trade the existence proof establishes new connections among existence techniques for discontinuous bayesian games

procurement contracting with time incentives theory and evidence in public procurement social welfare often depends on how quickly the good is delivered a leading example is highway construction where slow completion inflicts a negative externality on commuters in response highway departments award some contracts using scoring auctions which give contractors explicit incentives for accelerated delivery we characterize efficient design of these mechanisms we then gather an extensive data set of highway projects awarded by the california department of transportation between 2003 and 2008 by comparing otherwise similar contracts we show that where the scoring design was used contracts were completed 30 40 faster and the welfare gains to commuters exceeded the increase in procurement costs using a structural model that endogenizes participation and bidding we estimate that the counterfactual welfare gain from switching all contracts from the standard design to the efficient apb design is nearly 22 of the total contract value 1 14 billion copyright 2011 oxford university press

how natural gas tariff increases can influence poverty results measurement constraints and bias abstract energy tariff increases are generally essential to address environmental and fiscal concerns but they can also push households into poverty this paper estimates the expected poverty and distributional effects of a significant natural gas tariff reform in the context of armenia that increased the country s residential tariff by about 40 it is the first paper in the literature on energy tariff reforms to simultaneously try and control for substitution between all major energy sources not just some to take into account the seasonality of consumption over the full annual cycle and to apply different methods to assess changes in household consumption on natural gas and shifts in natural gas between main and supplementary heating sources existing papers thus generally overestimate the potential effects of energy price increases on household welfare the results here which face like any statistical study a set of important methodological constraints suggest nonetheless that this significant tariff increase led to an estimated 8 of households shifting away from gas mainly towards wood as their heating source it consequently resulted in an estimated 2 8 of households falling below the national poverty line while likely also influencing non monetary human welfare that cannot be well captured econometrically finally methodological assumptions and limitations in assessing these relationships as well as potential policy implications are outlined

on the continuous equilibria of affiliated value all pay auctions with private budget constraints abstract we consider all pay auctions in the presence of interdependent affiliated valuations and private budget constraints for the sealed bid all pay auction we characterize a symmetric equilibrium in continuous strategies for the case of n bidders budget constraints encourage more aggressive bidding among participants with large endowments and intermediate valuations we extend our results to the war of attrition where we show that budget constraints lead to a uniform amplification of equilibrium bids among bidders with sufficient endowments an example shows that with both interdependent valuations and private budget constraints a revenue ranking between the two auction formats is generally not possible equilibria with discontinuous bidding strategies are discussed

on the analysis of asymmetric first price auctions we provide a new set of tools for studying asymmetric rst price auctions connecting their equilibria to the concavity of the underlying type distributions and showing how one can use surplus expressions related to symmetric auctions to bound equilibrium behavior in asymmetric auctions we apply these tools to studying procurement auctions in which as is common in practice one seller is given an advantage re ecting for example better reliability or quality we show conditions under which for any given rst price handicap auction there is a second price auction with bonuses that outperforms it with most of our results involving ex post dominance

a shape constrained estimator of bidding function of first price sealed bid auctions this paper is concerned with economic analysis of first price sealed bid auctions with risk averse bidders the identification is based on exogenous variations in the number of bidders across auctions we present a shape constrained estimator of the bidding function which satisfies the theoretical properties of passing through origin positivity and monotonicity the underlying utility function and bidder value distribution are readily obtained from the estimated bidding function monte carlo simulations demonstrate good performance of the proposed estimator

bargaining over perfect complements owned separately with experimental test this paper considers the situation in which two perfect complements belong to different owners we calculate the bayesian nash equilibrium in the mechanism of k 1 price bargaining with private value and did experiment to test the theory

energy efficiency and rebound effects an econometric analysis of energy demand in the commercial building sector it is widely recognized that the adoption of energy saving innovations can induce an increase in the usage of the corresponding technologies and thus can possibly increase energy consumption among other concerns is that uncertainties regarding the magnitude of this rebound effect can deter policy makers from promoting energy efficiency this paper analyzes the rebound effects of the adoption of energy efficient technologies in commercial buildings based upon a structural model of technology adoption and subsequent energy demand at the building level the empirical results are that energy efficiency can reduce electricity use by about 35 and natural gas consumption by about 50

optimal bidding in auctions from a game theory perspective abstract the game theoretic perspective in auction bidding has provided a powerful normative framework for the analysis of auctions and it has generated an impressive volume of research contributions tracing this research we review key recent advances which have greatly expanded our understanding of the operation of auctions and produced a more accurate analysis of mechanism design and optimal bidding we follow various experimental studies which have shown that the predictive power of auction theory remains in many cases limited for this reason we concentrate on research themes which enhance the applicability of auction theory leading to more realistic descriptions of bidding behaviors we identify important innovations which expand the environment of auction bidding and carry us beyond rational decision making we conclude providing directions of future research and discussing their implications

nonparametric estimation of utility function in first price sealed bid auctions i propose a simple method to nonparametrically estimate the utility function in first price sealed bid auctions when bidders participation is exogenous using a pair of bid densities each for a different number of bidders i establish a contraction mapping that converges to the true utility function the method employs nonparametric estimates in place of the true bid densities to construct the contraction mapping and computes the utility function by iterating the contraction operator a monte carlo study shows that the method approximates the true utility function and valuation density

risk aversion and optimal reserve prices in first and second price auctions abstract we analyze the effects of buyer and seller risk aversion in first and second price auctions in the classic setting of symmetric and independent private values we show that the seller s optimal reserve price decreases in his own risk aversion and more so in the first price auction the reserve price also decreases in the buyers risk aversion in the first price auction thus greater risk aversion increases ex post efficiency in both auctions especially that of the first price auction at the interim stage the first price auction is preferred by all buyer types in a lower interval as well as by the seller

detecting collusion on highway procurement this paper proposes a procedure to detect collusion in asymmetric first price procurement the main objective is twofold first to provide a methodology to detect collusion using a structural approach and second to apply the methodology to field data on procurement auctions for highway construction in california i identify two different sets of firms as potential ring members relying on an exogenous number of bidders and the assumption that within each type bidders are symmetric i find evidence supporting the collusive scheme for the two mentioned sets of firms by comparing a model of competition and a model of collusion

the effect of bidders asymmetries on expected revenue in auctions abstract bidders asymmetries are widespread in auction markets yet their impact on behavior and ultimately revenue and profits is still not well understood this paper defines a natural benchmark auction environment to which to compare any private values auction with asymmetrically distributed valuations the main result is that the expected revenue from the benchmark auction dominates that from the asymmetric auction both in the first price auction and the second price auction moreover for classes of distributions that lend themselves to a quasi ordering of more or less asymmetric configurations we prove that the expected revenue is lower the more asymmetric bidders are these results formalize the idea that competition is reduced by bidders asymmetries applications to merger analysis joint bidding and investment are discussed

efficiency and competition in the long run the survival of the unfit abstract in a dynamic contest the current incumbent competes against a randomly assigned entrant in a private value all pay auction each period we focus on equilibria where the beliefs about the incumbent s type and the employed strategies are stationary we show that inefficient types survive even if the entrants arrive very frequently because the entrant plays more aggressively than the incumbent allowing a low type entrant to win against a high type incumbent in an example we show that if the incumbent is challenged more often then the equilibrium type of the incumbent is higher on average when the value of the prize is the same for all players the case studied in the public choice literature the equilibrium rent of the bidders is fully dissipated as the incumbent is challenged infinitely often the technical contribution lies in showing the existence of stationary equilibrium in an incomplete information game

an analysis of the welfare and distributive implications of factors influencing household electricity consumption abstract the deep economic crisis and the sharp rise in electricity prices have reduced electricity demand by spanish households this paper aims to analyse the responsiveness of household electricity demand and the welfare effects related to both factors in the 2006 2012 period by applying a demand model estimated with the quantile regression method the results show that the electricity consumption of medium high income households is particularly responsive to price increases whereas that of medium low income households is more responsive to changes in income the retail electricity price increases and the economic crisis have led to lower and steeper u shape price elasticities of demand and higher and steeper n shape income elasticities of demand the joint impact of those two factors on the welfare of lower income households is higher in relative terms i e as a share of household income than for other income groups these results suggest that the economic crisis and increases in retail electricity prices have had detrimental welfare effects especially on the lower income segment of the population they should be considered when financing climate and energy policies through the electricity bill and provide a rationale to take such support which pushes the retail electricity price upwards out of the electricity bill

an intertemporal general equilibrium model of asset prices this paper develops a continuous time general equilibrium model of a simple but complete economy and uses it to examine the behavior of asset prices in this model asset prices and their stochastic properties are determined endogenously one principal result is a partial differential equation which asset prices must satisfy the solution of this equation gives the equilibrium price of any asset in terms of the underlying real variables in the economy in this paper we develop a general equilibrium asset pricing model for use in applied research an important feature of the model is its integration of real and financial markets among other things the model endogenously determines the stochastic process followed by the equilibrium price of any financial asset and shows how this process depends on the underlying real variables the model is fully consistent with rational expectations and maximizing behavior on the part of all agents our framework is general enough to include many of the fundamental forces affecting asset markets yet it is tractable enough to be specialized easily to produce specific testable results furthermore the model can be extended in a number of straightforward ways consequently it is well suited to a wide variety of applications for example in a companion paper cox ingersoll and ross 7 we use the model to develop a theory of the term structure of interest rates many studies have been concerned with various aspects of asset pricing under uncertainty the most relevant to our work are the important papers on intertemporal asset pricing by merton 19 and lucas 16 working in a continuous time framework merton derives a relationship among the equilibrium expected rates of return on assets he shows that when investment opportunities are changing randomly over time this relationship will include effects which have no analogue in a static one period model lucas considers an economy with homogeneous individuals and a single consumption good which is produced by a number of processes the random output of these processes is exogenously determined and perishable assets are defined as claims to all or a part of the output of a process and the equilibrium determines the asset prices our theory draws on some elements of both of these papers like merton we formulate our model in continuous time and make full use of the analytical tractability that this affords the economic structure of our model is somewhat similar to that of lucas however we include both endogenous production and

uniqueness of equilibrium in sealed high bid auctions abstract for the case of two buyers we show that equilibrium in the sealed high bid auction is unique when i buyers reservations prices are drawn independently from distributions with finite support and positive mass at the lower endpoint ii buyers have private values and iii buyers preferences are log supermodular for more than two buyers we obtain the same result under the additional assumptions that iv buyers with the same reservation price have the same preferences v buyers are risk neutral or risk averse with non increasing absolute risk aversion and vi the supports of the different buyers distributions of reservation prices have the same upper endpoint

on stability of efficient cartel mechanisms in first price auctions with uninformed bidders abstract this paper investigates the stability of the efficient cartel mechanism in a sealed bid first price auction we find that even if bidders are not informed about who else participates in the auction when they submit bids the cartel is not stable hence the instability of cartels does not hinge on the information structure imposed on the bidders a seller does not have to reveal who participates in the auction to prevent them from forming a cartel

consumer behaviour theory and empirical evidence a survey this survey is designed to emphasize the relationship between empirical a nd theoretical considerations in the analysis of consumer behavior a lthough it focuses primarily on analysis at the individual or micro l evel it tries where possible to draw implications for the estimati on of aggregate relationships the importance of micro level analysis stems from the rapid expansion in available panel and survey data se ts this development has generated its own theoretical and empirical issues many of which are raised in this survey copyright 1988 by royal economic society

asymmetric first price auctions abstract a new approach to asymmetric first price auctions is proposed which circumvents the need to examine bidding strategies directly specifically the ratio of bidders endogenous payoffs is analyzed and compared to the ratio of the exogenous distribution functions that describe beliefs most of the results are inferred from this comparison in the existing theoretical literature assumptions of first order stochastic dominance or stronger imply that the latter ratio has very specific properties but no such assumptions are imposed here it is proven that first order stochastic dominance is necessary for bidding strategies not to cross when this assumption is relaxed in the numerical literature it is done in a manner that leads to exactly one crossing however it is straightforward to construct examples with several crossings finally bid distributions will cross in auctions with two bidders whenever second order but not first order stochastic dominance applies

premium auctions and risk preferences an experimental study in premium auctions the highest losing bidder receives a reward from the seller this paper studies the private value english premium auction epa for different risk attitudes of bidders we explicitly derive the symmetric equilibrium for bidders with cara utilities and conduct an experimental study to test the theoretical predictions in our experiment subjects are sorted into risk averse and risk loving groups we find that revenues in the epa are significantly higher when bidders are risk loving rather than risk averse these results are partly consistent with theory and confirm the general view that bidders risk preferences constitute an important factor that affects bidding behavior and consequently also the seller s expected revenue however individual subjects rarely follow the equilibrium strategy and revenue in our experiment is lower than in the symmetric equilibrium

equilibria in first price auctions with participation costs this paper characterizes the equilibria of first price auctions with participation costs in the independent private values environment bidders use cutoff strategies to decide whether they will participate in the auction it is shown that when bidders are homogeneous there always exists a unique symmetric equilibrium and further there is no other equilibrium when valuation distribution functions are inelastic when distribution functions are elastic at the symmetric equilibrium there exists an asymmetric equilibrium inelasticity elasticity includes concavity convexity of distribution functions as a special case we find similar results when bidders are heterogeneous

determinants of households space heating type a discrete choice analysis for german households abstract considering the increasing attention on efficient use of energy it becomes vitally important to understand the energy related behavior of households this article presents empirical evidence on the determinants of the space heating technology applied by a household three sets of variables are examined as potential influences building socio economic and regional characteristics to highlight both the differences and similarities the results are obtained from a sample of house owners and from a sample including all households the influence of socio economic factors is similar across these groups income is found to exert only a minor impact on the system choice dwelling features are significant in determining the heating type particularly in the sample including all households regional effects are important clear differences prevail between east and west germany

strategic design under uncertain evaluations structural analysis of design build auctions i investigate firms competition over price and product design under uncertain design evaluations in the context of design build db auctions reviewers design evaluations contain uncertainty from a bidder s perspective leading luck to curtail differences in firms chances of winning i model bidders behavior and derive semiparametric identification of the model primitives uncertain evaluations worsen the expected price of design quality and exacerbate an auctioneer s uncertainty in auction outcomes a simple adjustment in the auction mechanism may completely shut down the impact of uncertain evaluations on bidding incentives restoring efficient allocations of projects

first price auction symmetric equilibria with a general distribution abstract in this paper i obtain the mixed strategy symmetric equilibria of the independent private values first price auction for any distribution of valuations the equilibrium strategy is a pure strategy at the continuity points of the distribution and bids a mixed strategy at the discontinuity points of the distribution

econometrics of first price auctions a survey of the theoretical and applied literature the analysis of auctions is an active area of research for both theoretical and empirical economists this paper provides an overview of the literature relevant to the econometrics of auctions from a structural approach perspective the structural approach is a framework to analyze auction data in which theory and econometrics are closely related there are three fundamental issues at the heart of the structural analysis i are there any testable restrictions imposed by the theoretic model on the data ii is it possible to identify the structural elements that characterize an auction without a priori parametric information iii what can be said about feasible estimation procedures which do not rely on parametric assumptions this survey shows how the structural approach literature has answered each question

uniqueness and existence of equilibrium in auctions with a reserve price abstract we prove existence and uniqueness of equilibrium for a general class of two player bidding games we apply our results to the first price auction the combination of first and second price auctions the war of attrition the all pay auction as well as combinations of the latter two auction forms we also treat the first price auction without risk neutrality our results deal with the asymmetric affiliated common values environment in the case where signals are independent our results apply to all equilibria when signals are not independent our uniqueness results hold in the class of nondecreasing strategy equilibria journal of economic literature classification number d44

simple tests of distributional effects on macroeconomic equations the presence of distributional effects in macroeconomic equations is shown to coincide with nonlinearity in micro behavioral relationships parameters estimated with aggregate data as in representative agent models contain distributional biases that are not measurable using aggregate data alone tests for distributional effects and other measures of the extent of aggregation problems are derived using distributional data observed over time significant distributional effects are noted for a model of annual aggregate u s commodity expenditure data a static model that accommodates individual heterogeneity is found to be statistically equivalent to a simply dynamic model that accommodates first order autocorrelation

rational expectations information acquisition and competitive bidding most rational expectations market equilibrium models are not models of price formation and naive mechanisms leading to such equilibria can be severely manipulable in this paper a bidding model is developed which has the market like features that bidders act as price takers and that prices convey information higher equilibrium prices convey more favorable information about the quality of the objects being sold than do lower prices bidders can benefit from trading only if they have a transactions motive or if they have access to inside information apart from exceptional cases prices are not fully revealing a two stage model is developed in which bidders may acquire information at a cost before bidding and for which the equilibrium price is fully revealing resolving a well known paradox

nonparametric identification of risk aversion in first price auctions under exclusion restrictions this paper studies the nonparametric identification of the first price auction model with risk averse bidders within the private value paradigm first we show that the benchmark model is nonindentified from observed bids we also derive the restrictions imposed by the model on observables and show that these restrictions are weak second we establish the nonparametric identification of the bidders utility function under exclusion restrictions our primary exclusion restriction takes the form of an exogenous bidders participation leading to a latent distribution of private values that is independent of the number of bidders the key idea is to exploit the property that the bid distribution varies with the number of bidders while the private value distribution does not we then extend these results to endogenous bidders participation when the exclusion restriction takes the form of instruments that do not affect the bidders private value distribution though derived for a benchmark model our results extend to more general cases such as a binding reserve price affiliated private values and asymmetric bidders last possible estimation methods are proposed

evaluation of the effect of the power of one campaign on natural gas consumption abstract in this paper we study an advertising campaign launched by the irish government to induce more energy efficient behaviour and we assess its effect on residential natural gas consumption we first analyse changes in the daily consumption of natural gas and find that advertising leaflets had a significant but short lived effect on natural gas consumption we find no persistent effect of the campaign we then study three surveys administered to 1000 consumers prior to and during the campaign this repeated cross section allows us to determine that the efficiency campaign has increased awareness of behaviours that curb natural gas consumption however we do not find any significant effect of the campaign on self reported natural gas saving behaviour

out of equilibrium bids in first price auctions wrong expectations or wrong bids deviations from risk neutral equilibrium bids in auctions can be related to inconsistent expectations with correct best replies or correct expectations but deviant best replies e g because of risk aversion regret quantal response mistakes to distinguish between these two explanations we use a novel experimental procedure and study expectations together with best replies in symmetric and asymmetric auctions we extensively test the internal validity of this setup we find that deviations from equilibrium bids do not seem to be because of to wrong expectations but because of deviations from a risk neutral best reply

determinants of residential space heating expenditures in great britain in great britain several policy measures have been implemented in order to increase energy efficiency and reduce carbon emissions in the domestic sector this could for example be achieved by improving space heating efficiency and thus decreasing heating expenditure however in order to efficiently design and implement such policy measures a better understanding of the determinants affecting heating expenditure is needed in this paper we examine the following determinants socio economic factors building characteristics heating technologies and weather conditions in contrast to most other studies we use panel data to investigate household demand for heating in great britain our data sample is the result of an annual set of interviews with more than 5000 households starting in 1991 and ending in 2005 the sample represents a total of 64 000 observations over the fifteen year period our aim is to derive price and income elasticities both for britain as a whole and for different types of household our results suggest that differences exist between owner occupied and renter households these households react differently to changes in income and prices our results also imply that a number of socio economic criteria have a significant influence on heating expenditure independently of the fuel used for heating understanding the impacts of different factors on heating expenditure and impact differences between types of household is helpful in designing target oriented policy measures

equilibrium in sealed high bid auctions there is a voluminous theoretical literature on sealed high bid auctions auctions in which bids are sealed and the high bidder pays his bid see for example vickrey 1961 myerson 1981 riley and samuelson 1981 milgrom and weber 1982 matthews 1983 maskin and riley 1984 holt 1980 cox smith and walker 1988 a critical property on which this literature relies is the existence of equilibrium in which buyers bidding strategies are monotonic in their types this enables the analyst to perform comparative statics as the distribution of types changes and to compare the welfare properties of the high bid auction with those of other auction institutions one case in which the existence of monotonic equilibrium is readily established is that in which buyers types are distributed smoothly independently and symmetrically in this case there exists a symmetric equilibrium one in which all bidders share the same bidding behaviour as a function of their valuations and this bid function is the solution to a first order differential equation

equilibria in open common value auctions abstract a sufficient condition for uniqueness of nash equilibrium in second price common value auctions is identified we establish that there exists a continuum of equilibria in irrevocable exit common value auctions for the case of two bidders we provide plausible sufficient conditions under which the expected seller revenue is maximized at the symmetric equilibrium an example in which the auctioneer s revenue at the symmetric equilibrium in a second price auction is strictly greater than the revenue at many asymmetric equilibria in the corresponding irrevocable exit auction is provided

the existence of equilibrium in discontinuous economic games i theory the article presents information about the existence of equilibrium in discontinuous economic games in this paper and its sequel presents study the existence of nash equilibrium in games where agents payoff functions are discontinuous the enquiry is motivated by a number of recent studies that have uncovered serious existence problems in seemingly innocuous economic games in the sequel to this paper authors have explained the utility function in the economic games referred to earlier are neither continuous nor quasi concave however they demonstrate that the payoff functions in mildly modified versions of these constructs exhibit two weaker forms of continuity which together with the requirement of quasi concavity suffice for the existence of an equilibrium from this one may conclude that at least in the modified versions of these models discontinuities in the payoff functions are not the real source of the problem rather it is the failure of the payoff functions to the quasi concave which is responsible for the non existence of equilibrium these observations bear on the existence of nash equilibrium in pure strategies

endogenous asymmetry in a dynamic procurement auction we show how to numerically solve for a markov perfect equilibrium of a dynamic auction game where a procurer repeatedly purchases construction services from capacity constrained firms we find that the procurer is best off scheduling frequent auctions for small project sizes otherwise firm capacity utilization rates become larger and more asymmetric which softens competition and increases procurement costs we also find that forward looking bidding dampens the competition softening effects of asymmetry farsighted firms compete more intensely than myopic ones this can undermine the goal of a bid preference style affirmative action program more farsighted firms respond less to the asymmetry induced via bid preferences

semiparametric estimation of first price auctions with risk averse bidders in view of the non identification of the first price auction model with risk averse bidders this paper proposes some parametric identifying restrictions and a semiparametric estimator for the risk aversion parameter s and the latent distribution of private values specifically we exploit heterogeneity across auctioned objects to establish semiparametric identification under a conditional quantile restriction of the bidders private value distribution and a parameterization of the bidders utility function we develop a multistep semiparametric method and we show that our semiparametric estimator of the utility function parameter s converges at the optimal rate which is slower than the parametric one but independent of the dimension of the exogenous variables thereby avoiding the curse of dimensionality we then consider various extensions including a binding reserve price affiliation among private values and asymmetric bidders the method is illustrated on u s forest service timber sales and bidders risk neutrality is rejected

demand for space heating in apartment blocks measuring effects of policy measures aiming at reducing energy consumption abstract panel data covering the period 1984 1995 on energy consumption and technical characteristics of apartment blocks from denmark are analysed in order to measure effects of policy measures aimed at reducing the consumption of energy for space heating results indicate that building regulations have been important in reducing energy consumption in new buildings furthermore conditional price responses are estimated to be relatively small or non existent indicating small short run effects of fuel taxes on energy consumption in apartment blocks finally a consultancy scheme implemented with the purpose of improving knowledge about the potential for energy savings is found to have had moderate effects

asymmetric auctions with resale we study first and second price auctions with resale in a model with indepen dent private values with asymmetric bidders the resulting inefficiencies create a motive for post auction trade which in our model takes place via monopoly pricing the winner makes a take it or leave it offer to the loser we show a a first price auction with resale has a unique monotonic equilibrium and b with resale the expected revenue from a first price auction exceeds that from a second price auction the inclusion of resale possibilities thus permits a gen eral revenue ranking of the two auctions that is not available when these are excluded jel d44

asymmetry in procurement auctions evidence from snow removal contracts differences in cost efficiency and productivity across firms may introduce asymmetries in procure ment auctions relying on a structural approach this article investigates potential asymmetry among firms bidding for snow removal contracts in montrthe empirical results show that firms located in close proximity have a cost advantage relative to other firms in the most urbanised part of montrbecause of prohibitive equipment storage costs the extent of inefficiency due to asym metry is empirically assessed various policy experiments are performed a bidding preference policy shows that the city could expect to reduce its costs for allocating snow removal contracts when bidders willingness to pay depends in part on observable variables the princi pal s interest is not best served by creating a level auction playing field this article studies procurement auctions for snow removal contracts in montrit investigates the degree to which companies in disadvantageous locations should win even if they do not submit the lowest bid from the submitted bids a novel empirical methodology estimates the extent of cost variation across firms along with its variation within loca tion although the dispersion is substantial the gain from treating bidders unequally is limited when observed individual characteristics affect the firms costs and their bidding strategies all bidders cannot be treated alike these differences in characteristics or asymmetries among bidders may arise from their size as noted by laffont et al 1995 their capacity constraints as in jofre bonet and pesendorfer 2003 or the possession of better information as in hendricks and porter 1988 and hendricks et al 1994

not knowing the competition evidence and implications for auction design in a government auction program where first price auctions generate significantly higher revenue than english auctions i document evidence that bidders are uncertain about the number of auction entrants motivated by additional data evidence i estimate a structural model of auctions in which rivals participation is stochastic allowing for bidders risk aversion and asymmetry counterfactual simulations reveal that bidders uncertainty about the number of entrants combined with risk aversion substantially softens the revenue impact of low competition in first price auctions this explains the observed revenue patterns and uncovers an empirically important reason for sellers to favor first price auctions over english auctions

norwegian residential electricity demand a microeconomic assessment of the growth from 1976 to 1993 abstract the norwegian residential electricity consumption increased by an average of 3 annually during the period 1976 1993 political signals indicate that the growth in norwegian residential energy consumption should be reduced and that it may be necessary to increase energy taxes based on data for the sample of households from the annual consumer expenditure survey we study factors that are of importance explaining the growth in norwegian residential electricity demand during this period nearly half of the growth is due to an increase in the number of households while the rest reflects an increase in average consumption per household the increase in average consumption per household is due to an increasing number of households possessing electric household appliances such as dryers and dishwashers an increase in real disposable household income and in the floor space of dwellings

qualitative analysis of bayes nash equilibrium in weak asymmetric auctions abstract we propose a simple qualitative methodology for improving the understanding of the nature of equilibrium strategies in asymmetric first price sealed bid auctions when departures from symmetry are weak we exemplify this methodology through the exposition of three examples already studied in literature maskin and riley 2000a fibich and gavious 2003 bajari 2001

competitive bidding in asymmetric multidimensional public procurement abstract in a multidimensional procurement auction such as a most economically advantageous tender asymmetric opponents with different cost structure and predetermined quality compete for the highest score which combines price and quality production inefficiency characterizes each tenderer we derive the equilibrium equations and boundary conditions for which closed form solutions are not available we compare the bidding behavior of any pair of rival tenderers and demonstrate that equilibrium prices critically depend on the comparison of the cost difference c with respect to the increment of score attribute s for the same production inefficiency a tenderer with a relatively higher c compared to s stands in weak competitive position and is forced to bid more aggressively we show how the opposing advantage of each bidder with respect to cost or score attribute induces the extent of competition under a different perspective we analyze bidding by a pair of tenderers for a given maximum score achieved when pricing is at cost our analysis reveals that the player with consistently higher percentage change of the probability of being more efficient than the rival is in a disadvantageous position and receives lower score in the awarding process our results are useful for tenderers in assessing their competitive position the findings enable contracting authorities to evaluate competition at the preliminary stage of design and to examine the effects of the awarding criterion on pricing

environmental regulation of households an empirical review of economic and psychological factors abstract the literature on sustainable consumption and environmental regulation of household behavior is dominated by conceptual and normative approaches as a result many suggestions lack a firm empirical basis to overcome this deficiency econometric studies in three areas of environmentally relevant activities of households are reviewed residential use of energy generation of solid waste and recycling and residential use of water next to price and income elasticities attention is devoted to individual socio economic features and psychological factors such as attitudes knowledge perceptions and values potential psychological determinants and related insights are further examined by discussing a range of representative and illustrative statistical psychological studies of environmental behavior one important general finding is that there are very few empirical studies that systematically combine socio economic and psychological determinants a range of insights for environmental policy is derived and research recommendations are offered

the determinants of residential gas demand in ireland abstract this paper examines the determinants of residential gas demand in ireland using a micro econometric analysis of the daily gas consumption panel data from ireland s smart metering gas consumer behavioural trial it also investigates the effectiveness of the demand side management stimuli that were tested during the smart metering trial the analysis is based on a sample of 1181 households over 539 days in the period from 1st december 2009 to 30th may 2011 the results provide evidence that weather together with the structural characteristics of the dwellings and the socio economic characteristics of the households are significant factors in explaining residential gas demand more specifically weather is found to be the most influential factor on household s daily gas consumption finally the demand side management stimuli employed in the smart metering trial were found to reduce daily household gas use on average

how bidder s number affects optimal reserve price in first price auctions under risk aversion this paper shows that in the classic symmetric and independent private value environments the seller s optimal reserve price is a decreasing function of the number of bidders in the first price auctions when the seller and or buyers are risk averse

the microeconometric approach to modelling energy demand some results for uk households the paper is concerned with the empirical modeling of domestic demand for energy at the level of the individual household a model of household energy expenditures and energy using durable ownership is described estimation takes place using a pooled sample of households drawn from the repeated cross sections of the annual family expenditure survey fes price and income elasticities are found to be highly dependent on individual household characteristics type of house tenure energy using durable ownership and outside temperature finally the results are placed in a policy relevant context copyright 1991 by oxford university press

premium auctions and risk preferences abstract in a premium auction the seller offers some payback called premium to a set of high bidders at the end of the auction this paper investigates how the performance of such premium tactics is related to the bidders risk preferences we analyze a two stage english premium auction model with symmetric interdependent values in which the bidders may be risk averse or risk preferring upon establishing the existence and uniqueness of a symmetric equilibrium we show that the premium causes the expected revenue to increase in the bidders risk tolerance a net premium effect is key to this result

sequential common value auctions with asymmetrically informed bidders we study an in nitely repeated rst price auction with common values we focus on one sidedincomplete information in which one bidder learns the objects value which itself does not change overtime learning by the uninformed bidder occurs only through observation of the bids the proprietaryinformation is eventually revealed and the seller extracts essentially the entire rent for large discountfactors both players pay offs tend to 0 as the discount factor tends to 1 however the uninformed bidderdoes relatively better than the informed bidder we discuss the case of two sided incomplete informationand argue that under a markovian re nement the outcome is pooling as information is revealed onlyinsofar as it does not affect prices

estimating petroleum products demand elasticities in nigeria a multivariate cointegration approach this paper formulates and estimates petroleum products demand functions in nigeria at both aggregative and product level for the period 1977 to 2006 using multivariate cointegration approach the estimated short and long run price and income elasticities confirm conventional wisdom that energy consumption responds positively to changes in gdp and negatively to changes in energy price however the price and income elasticities of demand varied according to product type kerosene and gasoline have relatively high short run income and price elasticities compared to diesel overall the results show petroleum products to be price and income inelastic

the cost of natural gas shortages in ireland this paper investigates the economic implications of disruptions of one to ninety days to the supply of natural gas in ireland we assess the impact of a hypothetical gas supply disruption in both winter and summer in 2008 with observed market characteristics and in 2020 with projected market characteristics the cost of a natural gas outage includes the cost of natural gas being unavailable for heating and other purposes in the industrial and commercial sectors lost consumer surplus in the residential sector the cost of lost electricity in all sectors and lost vat on the sale of gas and electricity ireland generates much of its electricity from natural gas and the loss of this electricity accounts for the majority of the cost of a natural gas outage losing gas fired electricity would cost 0 1 1 0 billion euro per day depending on the time to the week the time of year and rationing industry should be rationed before households to minimise economic losses but current emergency protocols do the opposite if gas fired electricity is unavailable for three months the economic loss could be up to 80 billion euro about half of gross domestic product losing gas for heating too would add up to approximately 8 billion euro in economic losses we also discuss some options to increase ireland s security of supply and find that the cost is a small fraction of the avoided maximum damage

on the existence of pure and mixed strategy nash equilibria in discontinuous games a game is better reply secure if for every nonequilibrium strategy x and every payoff vector limit u resulting from strategies approaching x some player i has a strategy yielding a payoff strictly above u i even if the others deviate slightly from x if strategy spaces are compact and convex payoffs are quasiconcave in the owner s strategy and the game is better reply secure then a pure strategy nash equilibrium exists better reply security holds in many economic games it also permits new results on the existence of symmetric and mixed strategy nash equilibria

competition in the economic crisis analysis of procurement auctions we study the effects of the recent economic crisis on firms bidding behavior and markups in sealed bid auctions using data from austrian construction procurements we estimate bidders construction costs within a private value auction model we find that markups of all bids submitted decrease by 1 5 percentage points in the recent economic crisis markups of winning bids decrease by 3 3 percentage points we also find that without the government stimulus package this decrease would have been larger these two pieces of evidence point to pro cyclical markups

the income elasticity of household energy demand a quantile regression analysis this article examines variation in the income elasticity of household energy demand across the energy expenditure distribution using expenditure data from the five most recent household budget surv

are bid preferences benign the effect of small business subsidies in highway procurement auctions abstract bid preferences in procurement auctions allow firms from an identifiable group an advantage in bidding against unfavored firms while economic efficiency is expected to fall as a result of bid preferences government procurement costs may either increase or decrease depending on the competitive response of favored and unfavored firms this paper uses data from california auctions for road construction contracts where small businesses receive a 5 percent bid preference in auctions for projects using only state funds and no preferential treatment on projects using federal aid i show that while firms bidding behavior matches theoretical predictions procurement costs are 3 8 percent higher on auctions using preferences the higher procurement cost in preference auctions is attributed to reduced participation by lower cost large firms structural estimates of latent firm costs are then used to evaluate how efficiency and the division of surplus between firms and the government are impacted by bid preferences firm profits are 3 1 percent lower under bid preferences however this is overwhelmed by the efficiency loss due to reduced large firm participation the efficiency loss conditional on firm participation is estimated to represent around 0 1 percent of overall procurement costs including the adverse effect of preferences on the participation of large firms increases the estimated efficiency loss to 3 6 percent which represents 27 cents for each additional dollar awarded to small businesses through the program counterfactual simulations indicate that if participation were instead inelastic to bid preferences the 5 percent bid preference would be close to the optimal level

what do we learn about consumer demand patterns from micro data the aim of this paper is to assess the importance of using micro level data in the econometric analysis of consumer demand to do this we utilize a time series of repeated cross sections covering some 4 000 households in each of 15 years employing a number of different aggregation procedures we conclude that aggregate data alone are unlikely to produce reliable estimates of structural price and income coefficients however once certain aggregation factors as well as trend and seasonal components are included an aggregate model is not necessarily outperformed across all demand equations in terms of forecasting ability jel d12 c52 c31 the purpose of this paper is to develop a complete consumer demand system based on a time series of individual household data and to use it to measure the biases introduced into the study of consumer de mand behavior when aggregate data are used in place of the appropriate microeco nomic data we assess the suitability of ag gregate data through the impact on income and price elasticities and by evaluating the ability of both micro and aggregate based models to forecast aggregate consumer de mand the biases introduced by the use of aggregate data depend upon the way that household characteristics interact with in come and price effects and on departures of demand systems from linearity we explore the structure of microeconomic demand sys tems and the role of household characteris tics in the behavior of consumer demand both for the light this may shed on the pattern of future demands and for the im plications this behavior has for issues of aggregation consumer demand patterns typically found in micro data sets vary considerably across households with different household characteristics and with different levels of income we model this variability by making intercept and slope parameters in the budget share equations of our demand sys tem depend on household characteristics and by allowing for nonlinear total log expenditure terms in fact in theory consistent demand systems it is total ex penditure rather than disposable income that is allocated across goods we find that this general framework leads to a well specified data coherent demand system which is a quadratic extension of the popu lar almost ideal model of angus s deaton and john muellbauer 1980 the micro level estimates are shown to be sensitive to the treatment of endogeneity of total expen diture and to the specification of interaction terms with household characteristics in ad dition this specification is also shown to possess many attractive features for the evaluation of aggregate models

notes and comments the amsterdam auction the amsterdam auction has been used to sell real estate in the dutch capital for centuries by awarding a premium to the highest losing bidder the amsterdam auction favors weak bidders without having the implementation difficulties of myerson s 1981 optimal auction in a series of experiments we compare the standard first price and english auctions the optimal auction and two variants of the amsterdam auction with strongly asymmetric bidders the second price amsterdam auction raises substantially more revenues than standard formats and only slightly less than the optimal auction

fighting collusion in auctions an experimental investigation the danger of collusion presents a serious challenge for auctioneers in this paper we compare the collusive properties of two standard auctions the english auction and the first price sealed bid auction and a lesser known format the amsterdam second price auction in the amsterdam auction the highest losing bidder earns a premium for stirring up the price we study two settings in one all bidders can collude and in another only a subset is eligible the experiments show that the amsterdam auction triggers less collusion than the standard auctions we compare experimental results to theoretical predictions and provide an explanation where they differ