Dynamic Auction Markets

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This award funds research on dynamic auction markets. Auctions are used to buy and sell many important goods and services; these market environments include electricty markets, financial markets, public procurement, and a wide range of e-commerce applications. The firms and customers participating in these markets usually make many purchases and sales; this means that dynamic behavior is an important feature of these markets. Understanding these dynamics both in and out of market equilibrium is an important and open challenge.The PI seeks first to develop new mathematical models of these markets and will then use data from actual auction markets to formally test the models. The hope is that by iterating between theory and data he will create a new category of tools that are well-tested and can be employed by other researchers interested in studying markets with these features. The empirical analysis includes data from two different kinds of markets: ecommerce auctions for cameras sold through eBay and electricity markets in Great Britain.This project has important broader impacts. The results will be useful for competition authorities who seek to understand the dynamic concerns facing buyers and sellers in auction markets. The methods developed here may also be useful for analyzing dynamic behavior in non-auction markets. For example, the third project is about how firms adjust their behavior after a policy change, and the results will be valuable to electricity regulators who need to consider how US firms will adjust to proposed 'smart grid' policies and technologies.