Timothy P. Hubbard

Structural Econometric Methods in Auctions: A Guide to the Literature

Auction models have proved to be attractive to structural econometricians who, since the late 1980s, have made substantial progress in identifying and estimating these rich game-theoretic models of bidder behavior. We provide a guide to the literature in which we contrast the various informational structures (paradigms) commonly assumed by researchers and uncover the evolution of the eld. We highlight major contributions within each paradigm and benchmark modi cations and extensions to these core models. Lastly, we discuss special topics that have received substantial attention among auction researchers in recent years, including auctions formultiple objects, auctions with risk averse bidders, testing between common and private value paradigms, unobserved auction-speci c heterogeneity, and accounting for an unobserved number of bidders as well as endogenous entry.Auction models have proved to be attractive to structural econometricians who, since the late 1980s, have made substantial progress in identifying and estimating these rich game-theoretic models of bidder behavior. We provide a guide to the literature in which we contrast the various informational structures (paradigms) commonly assumed by researchers and uncover the evolution of the eld. We highlight major contributions within each paradigm and benchmark modi cations and extensions to these core models. Lastly, we discuss special topics that have received substantial attention among auction researchers in recent years, including auctions formultiple objects, auctions with risk averse bidders, testing between common and private value paradigms, unobserved auction-speci c heterogeneity, and accounting for an unobserved number of bidders as well as endogenous entry.

Entry, growth and survival in the green industry

ABSTRACT Entry, growth and survival in the green industry. Regional Studies. Economists are interested in the factors that induce firm entry, lead to growth and help firms succeed in various markets. Such information can be helpful to policy-makers, but, unfortunately, such patterns have not been considered for ‘green industries’. This paper takes advantage of a recent definition of green industries proposed by the US Bureau of Labor Statistics (BLS) to investigate patterns characterizing these industries within the State of Texas.

Identification and estimation of a bidding model for electronic auctions

Because of discrete bid increments, bidders at electronic auctions engage in shading instead of revealing their valuations, which would occur under the commonly assumed second-price rule. We demonstrate that misspecifying the pricing rule can lead to biased estimates of the latent valuation distribution, and then explore identification and estimation of a model with a correctly specified pricing rule. A further challenge to econometricians is that only a lower bound on the number of participants at each auction is observed. From this bound, however, we establish nonparametric identification of the arrival process of bidders—the process that matches potential buyers to auction listings—which then allows us to identify the latent valuation distribution without imposing functional-form assumptions. We propose a computationally tractable, sieve-type estimator of the latent valuation distribution based on B-splines, and then compare two parametric models of bidder participation, finding that a generalized Poisson model cannot be rejected by the empirical distribution of observables. Our structural estimates enable us to explore information rents and optimal reserve prices on eBay.

Efficacy of a Bidder Training Program: Lessons from LINC

In an effort to accommodate a change in the Federal Highway Administrations goals towards race-neutral methods concerning the involvement of Disadvantaged Business Enterprises in contracting, the Texas Department of Transportation created a bidder training program. Using ten years of data, we examine the effects this program had on bidder behavior, project costs for the government, and the ability of these firms to compete. Unlike other policies that target these firms, we find the program generated substantial savings for the state which come at a very low cost.

Trade and transboundary pollution: quantifying the effects of trade liberalization on CO 2 emissions

I consider a multi-country trade model in which a subset of firms emit transboundary pollution as a by-product of production. Consumers are harmed by these emissions, creating a role for government intervention. Theoretically, the effects of trade liberalization on the level of pollution and aggregate welfare are ambiguous – they depend on values of country-specific pollution disutility parameters. I use real-world data to estimate trade costs and to recover values for these disutility parameters that are consistent with the Nash–Walras equilibrium predicted by the model. In counterfactual exercises, I investigate the effects of changing trade costs on the aggregate level and distribution of pollution as well as the welfare of each country. These experiments suggest concern regarding the effect further trade liberalization has on the level of firm-generated pollution and that agreements like the Kyoto Protocol can be effective even when governments behave strategically.

Entry and Exit Patterns of "Toxic" Firms

We pair an establishment-level dataset from Texas with public information available in the Toxics Release Inventory (TRI) to evaluate the standing of dirty industries in Texas census tracts with a focus on environmental justice concerns. The share of nonwhite residents in a tract is positively correlated with the number of TRI-reporting firms, and an inverse-U-shaped relationship characterizes the number of TRI-reporting firms and a tracts median income. Even after controlling for factor prices and other covariates that might drive firm location decisions, entrants that report to the TRI are more likely to locate in areas with a higher share of nonwhite residents. Firms that report to the TRI are also more likely to enter areas with a low share of college graduates. In contrast, the number of entrants from industries that do not have TRI reporters is negatively related to the percentage of nonwhite residents in a tract. Firms in these non-reporting industries are also more likely to enter areas with a high share of college graduates. Polluters appear to agglomerate, raising concerns about both chemical releases being concentrated in certain tracts, and also affecting nonwhite-dense areas disproportionately. The strength of these effects often depend on an urban/rural classification, with rural areas experiencing the most pronounced concerns. Moreover, TRI-reporting firms are less likely to exit the market relative to their peers that operate in the same industry but do not need to file TRI reports, suggesting that releases may affect a region in the long run.

Structural Econometrics of Auctions: A Review

We review the literature concerned with the structural econometrics of observational data from auctions, discussing the problems that have been solved and highlighting those that remain unsolved as well as suggesting areas for future research. Where appropriate, we discuss different modeling choices as well as the fragility or robustness of different methods.