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Auction Format Matters: Evidence on Bidding Behavior and Seller Revenue

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  • Robert A. Feldman

    (International Monetary Fund)

  • Vincent Reinhart

    (International Monetary Fund)

Abstract

This paper evaluates the importance of auction format on bidding behavior and seller revenue, focusing on differences in performance under uniform-price and discriminatory-price formats. The analysis is based on a standard benchmark model from which empirically testable hypotheses are derived on the optimal amount of bid shading that generates revenue equivalence between the two formats. Applying this model to data from the IMF gold auctions run in 1976-80, we find evidence of statistically significant shading in excess of the theoretically derived optimum under the discriminatory format. This evidence suggests greater seller revenue under the uniform-price format.

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal Staff Papers - International Monetary Fund.

Volume (Year): 43 (1996)
Issue (Month): 2 (June)
Pages: 395-418

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Handle: RePEc:pal:imfstp:v:43:y:1996:i:2:p:395-418

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Cited by:
  1. Rodolfo Guerrero & José Luis Negrín, 2006. "Eficiencia del sistema bancario mexicano 1997-2004: una estimación dinámica," Monetaria, Centro de Estudios Monetarios Latinoamericanos, Centro de Estudios Monetarios Latinoamericanos, vol. 0(3), pages 235-259, julio-sep.
  2. Walter Orellana & Bernardo Fernández & Vladimir Fernández, 2006. "Subasta electrónica interactiva y subasta a sobre cerrado: un análisis comparativo de los resultados en Bolivia," Monetaria, Centro de Estudios Monetarios Latinoamericanos, Centro de Estudios Monetarios Latinoamericanos, vol. 0(3), pages 299-345, julio-sep.
  3. Paul Castillo & Carlos Montoro & Vicente Tuesta, 2006. "Estimación de la tasa natural de interés para la economía peruana," Monetaria, Centro de Estudios Monetarios Latinoamericanos, Centro de Estudios Monetarios Latinoamericanos, vol. 0(3), pages 261-298, julio-sep.
  4. Osório-Peters, Suhita, 1998. "The goals of sustainable development and the reform of the EU banana trade regime: a discussion of different trade instruments," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 98-31, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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