Keyword : price-formation, descending auction, bid-function, ordinary least squares

Dwi Winarsih
LPPM UNS, Penelitian, DP2M, Hibah Kompetitif (Publikasi Internasional), 2009

This paper is the preliminary study on price formation of descending auction model of agriculture auction of Central Java Province Indonesia. With applying field data of auction during 2005 – 2008 to estimate the winning bid that assumed as a linear function of variables characteristic of commodity and market environment. The prelimenary estimates suggest that the winning bid is significantly depends on the reservation price of the seller. It satisfies the optimal bidding strategy hypothesis. This, it allows us to adopt more structural econometric model which is derived directly from theoretical auction model following the method of LAFFONT and MONER-DILHAN and OSSARD (1995)