Research On The Optimal Reserve Price In English Auction Of The Used Cars

With the continuous improvement of people's quality of life in China,the vigorous development of automotive industry and the government agencies's deepening reform of the public transport system,in recent years,China's used cars' stock has increased year by year and also has formed a huge social resources.How to realize the effective allocation of this kind of resources has become one of the practical problems in the field of theory and practice.In view of the heterogeneity of used cars and the asymmetry of the information of traders,the auction's pricing method is widely used in the used cars' market.In particular,in the used cars' platform of online auction,the domestic and foreign has widely choosen English auction in which the auctions submit their tenders in accordance with their valuation.Therefore,in order to promote the development and prosperity of used cars' goods market in our country,it is necessary to address some key problems that affect the efficiency of English auction.This paper studies the setting of optimal reserve price of the English auction in the used cars' market through the establishment of the structure of the used cars' English auction econometric model.In fact,the reserve price of the auction of goods not only has an important impact on the seller's revenue,but also affects the consumer surplus to the consumers,as well as the transaction efficiency of commodity market.Therefore,a reasonable balance of the reserve price is conducive to the effective allocation of resources,but also easy to promote the healthy development of used cars'auction market.In order to oatain the optiaml reserve price,the key is to how to get the distribution function of bidders' valuation.For this purpose,according to the characteristics of the game equilibrium solution in the English auction,under the assumption of the independent private value of the English auction theory,this paper derive the bids' bidding strategy.Then according to the data from April of 2015 to August of 2015 in Taobao's used cars'auction,through the analysis of game equilibrium with incomplete information and the analysis of the econometric modeling of the used cars' depreciation rate,we derive the distribution function which is from the bids' valuation indirectly by conditional maximum likelihood estimation method,and solve the seller's reservation price strategy in the used cars' auction.The study found that the sellers putting their value as a reserve price is not the best choice to achieve utility maximization,to achieve the maximization of utility,the seller should improve the reserve price based on their valuation.