Nonparametric estimation of online judicial auctions of used cars in China
In recent years,Chinese online judicial auctions have developed rapidly,and it is of great importance to hold empirical research in this field.This paper exploits the data for Chinese online judicial auctions of used cars in Alibaba to study the entry cost in ascending auctions with selective entry.We propose a two-step estimation method based on the identification strategy of Athey and Haile(2002)and Levin and Smith(1994).From the empirical study,we have four findings:(ⅰ)The CDFs of post entry value distribution comply with the law of ordered dominance,and the confidence bands of post entry value distribution are quite tight;(ⅱ)the estimates entry cost is monotonic to the appraisal value:The higher the appraisal value,the higher the entry cost;(ⅲ)there will be a higher revenue in the ascending auction than the first-price sealed bid auction,and the advantages are significant in low,medium,and high percentiles;(ⅳ)when the entry cost is cut by 25%or 50%,the revenue is increased significantly;when the entry cost is add by 75%or 100%,the revenue is decreased significantly.Furthermore,the improvement in revenue brought by lower entry cost is greater than the reduction in revenue brought by higher entry cost.