Deriving an estimate of the optimal reserve price: An application to British Columbian timber sales

In this paper, I use a simple game-theoretic model of behaviour at oral, ascendingprice auctions within the independent private-values paradigm to put structure upon data from a sample of timber sales held in the province of British Columbia, Canada where, to a first approximation, the independent private-values paradigm appears appropriate. I then estimate several different empirical specifications and use the methods of Vuong to decide which model is closer to the truth than the others. Under different assumptions concerning the sellerʹs valuation of the timber, estimates of the optimal reserve price are calculated.