Winner’s Curse and the Competitive Effect: Measuring Competition in the Viatical Settlement Market
نویسندگان
چکیده
This paper attempts to develop a methodology for measuring competition in markets where the object for sale has a common but unknown monetary value. We do this by conceptualizing transactions in the viatical settlement market as first-price, common value auctions and deriving a parametric model for equilibrium bid functions. Within this model, we then estimate parameters and make observations about bidder behavior. Our analysis finds on average, fewer than five bidders compete for viatical contracts. We believe this is strong evidence of market power. Finally, by simulating comparative statics on the distribution of number of bidders, we conclude that at our estimated levels of competition, any evidence of winner’s curse was completely dominated by the competitive effect.
منابع مشابه
Technology , Monopoly , and the Decline of the Viatical Settlements Industry 1
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