Modeling the Price-Demand Relationship Using Auction Bid Data

pricing, demand function, auction, estimation This report documents two mathematical models for extracting the price-demand relationship, commonly known as the demand function or demand curve, for consumer products using online auction bid data. The first model assumes that all bidding sequences are equally likely; the second model assumes that the bidders arrive in Poisson streams and utilizes the time of bid information. Our goal is to estimate, from recorded bids in n auctions, the proportions of potential (in addition to the known) bidders who are willing to bid a price.