Invites you to a

School seminar presented by

Tang Srisuma

(National University of Singapore)

Identification and Estimation of a Search Model: A Procurement Auction Approach

Co-authors:

Mateusz Mysliwski (Norwegian School of Economics)

Fabio Sanches (Insper)

Daniel Silva Jr (City, University of London) 

Wednesday 2 November

2.00pm – 3.30pm

Via Zoom: Meeting Link

Abstract: We propose a model of nonsequential consumer search where consumers and firms differ in search and production costs respectively. We characterize the equilibrium of the game. We nonparametrically identify the model using market shares and prices. Our strategy to identify firm’s cost distribution is similar to Guerre, Perrigne and Vuong (2000) as the price setting problem for firms resembles that of a procurement auction. Our estimator for the firm’s cost pdf has the same convergence rate as the optimal rate in Guerre et al. uniformly over any fixed subset in the interior of the support, and it can converge arbitrarily close to that rate when the subset increases to the full support asymptotically. The difference in rates is due to the possible presence of a pole in the price pdf, which we show to be a common feature in equilibrium. Our simulation shows estimators that ignore the pole can have substantial bias. Our results apply to search models with homogenous or vertically differentiated products.

For further information contact: School seminar series coordinators Dr Ye Lu (ye.lu1@sydney.edu.au) & Dr Alastair Fraser (alastair.fraser@sydney.edu.au)

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