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Potential Competition and Possible Collusion in Forest Service Timber Auctions

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  • Brannman, Lance Eric

Abstract

Potential competition significantly affects the size of winning bids in Forest Service sealed-bid timber auctions and has little effect on winning bids in oral auctions. Winning sealed bids depend even more, however, on actual competition, a result suggesting collusion. This explanation is supported using an index representing the likelihood an auction was rigged. Preclusive bidding (a type of collusion) in oral auctions is indicated by a positive relationship between hauling distances and the size of winning sealed bids. Comparisons of winning-bid variances, overbids, and numbers of bidders across auction type support this explanation of oral auction prices. Copyright 1996 by Oxford University Press.

Suggested Citation

  • Brannman, Lance Eric, 1996. "Potential Competition and Possible Collusion in Forest Service Timber Auctions," Economic Inquiry, Western Economic Association International, vol. 34(4), pages 730-745, October.
    • Handle: RePEc:oup:ecinqu:v:34:y:1996:i:4:p:730-45
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    Cited by:

    1. Feng’ e Yang & Shashi Kant, 2008. "Rent Capture Analysis of Ontario’s Stumpage System Using an Enhanced Parity Bounds Model," Land Economics, University of Wisconsin Press, vol. 84(4), pages 667-688.
    2. Daniel Rondeau & Pascal Courty & Maurice Doyon, 2016. "Simultaneous Allocation of Bundled Goods through Auctions: Assessing the Case for Joint Bidding," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(3), pages 838-859.
    3. Saphores, Jean-Daniel & Vincent, Jeffrey R. & Marochko, Valy & Abrudan, Ioan & Bouriaud, Laura & Zinnes, Clifford, 2006. "Detecting collusion in timber auctions : an application to Romania," Policy Research Working Paper Series 4105, The World Bank.
    4. Tibor Neugebauer, 2007. "Bid and price effects of increased competition in the first-price auction: experimental evidence," LSF Research Working Paper Series 07-17, Luxembourg School of Finance, University of Luxembourg.
    5. Gerard Marty & Raphaele Preget, 2007. "A Socio-economic Analysis of French Public Timber Sales," Working Papers - Cahiers du LEF 2007-03, Laboratoire d'Economie Forestiere, AgroParisTech-INRA.
    6. Niquidet, Kurt & van Kooten, G. Cornelis, 2004. "Are Log Markets Competitive? Empirical Evidence And Implications For Canada-U.S. Trade In Softwood Lumber," 2004 Annual meeting, August 1-4, Denver, CO 19985, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Jeffrey Biggs & Susanna Laaksonen-Craig & Kurt Niquidet & G. Cornelis van Kooten, 2006. "Resolving Canada-US Trade Disputes in Agriculture and Forestry: Lessons from Lumber," Canadian Public Policy, University of Toronto Press, vol. 32(2), pages 143-156, June.
    8. B. Jacobsen, 1999. "Auctions Without Competition: The Case of Timber Sales in the Murmansk Region," Working Papers ir99072, International Institute for Applied Systems Analysis.
    9. Zhongmin Wang & Minbo Xu, 2016. "Empirical Evidence on Competition and Revenue in an All-Pay Contest," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(3), pages 429-448, November.
    10. Raphaële Préget, 2011. "What is the cost of low participation in French Timber auctions?," Post-Print hal-00670762, HAL.
    11. Srabana Gupta, 2001. "The Effect of Bid Rigging on Prices: A Study of the Highway Construction Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 19(4), pages 451-465, December.
    12. Yamamoto, Yuki & Takeuchi, Kenji & Shinkuma, Takayoshi, 2014. "Is there a price premium for certified wood? Empirical evidence from log auction data in Japan," Forest Policy and Economics, Elsevier, vol. 38(C), pages 168-172.
    13. Michael Beckmann, 2004. "Art Auctions and Bidding Rings: Empirical Evidence from German Auction Data," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 28(2), pages 125-141, May.
    14. Srabana Gupta, 2002. "Competition and collusion in a government procurement auction market," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 30(1), pages 13-25, March.
    15. Plato, Gerald E., 2001. "The Soybean Processing Decision: Exercising A Real Option On Processing Margins," Technical Bulletins 33567, United States Department of Agriculture, Economic Research Service.
    16. Lim, Terence & Lo, Andrew W. & Merton, Robert C. & Scholes, Myron S., 2006. "The Derivatives Sourcebook," Foundations and Trends(R) in Finance, now publishers, vol. 1(5–6), pages 365-572, April.

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