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The Price Effects of Increased Competition in Auction Markets

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Author Info
Brannman, Lance
Klein, J Douglass
Weiss, Leonard W

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Abstract

Bidding theory predicts low er selling winning bids (higher buying winning bids) as numbers of bidders incre ase. Alternative versions predict that winning bids fall (rise) with the second order statistic, the maximum order statistic, or 1/N. The authors test these pre dictions using data on underwriters' spreads on tax exempt bonds, offshore oil t racts, and National Forest timber. They estimate winning bids using general vari ables for the product and dummies for 1, 2, . . .11 bidders. In all cases mor e bidders meansignificantly lower (selling) winning bids. The expected maximum order statistic fits better than either the second order statistic or1/N, in te n out of twelve cases. Copyright 1987 by MIT Press.

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Publisher Info
Article provided by MIT Press in its journal Review of Economics & Statistics.

Volume (Year): 69 (1987)
Issue (Month): 1 (February)
Pages: 24-32
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Handle: RePEc:tpr:restat:v:69:y:1987:i:1:p:24-32

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  1. Roy Gardner & Roger Stover, 1998. "The Role of Information in Resolution Trust Corporation Auctions of Failed Thrifts," Journal of Financial Services Research, Springer, vol. 14(3), pages 209-221, December. [Downloadable!] (restricted)
  2. AndréS GóMez-Lobo & Stefan Szymanski, 2001. "A Law of Large Numbers: Bidding and Compulsory Competitive Tendering for Refuse Collection Contracts," Review of Industrial Organization, Springer, vol. 18(1), pages 105-113, February. [Downloadable!] (restricted)
  3. Bedri Kamil Onur Tas & Rasim Ozcan & Ilke Onur, 2008. "Public Procurement Auctions and Competition in Turkey," Working Papers 0814, TOBB University of Economics and Technology, Department of Economics. [Downloadable!]
  4. Blecherman, Barry, 1996. "Is There a Winner's Curse In The Market For Baseball Players? Evidence From The Field," Working Papers 966, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  5. Srabana Gupta, 2001. "The Effect of Bid Rigging on Prices: A Study of the Highway Construction Industry," Review of Industrial Organization, Springer, vol. 19(4), pages 451-465, December. [Downloadable!] (restricted)
  6. Susan Athey & Philip A. Haile, 2006. "Empirical Models of Auctions," Levine's Bibliography 122247000000001045, UCLA Department of Economics. [Downloadable!]
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  7. Srabana Gupta, 2002. "Competition and collusion in a government procurement auction market," Atlantic Economic Journal, International Atlantic Economic Society, vol. 30(1), pages 13-25, March. [Downloadable!] (restricted)
  8. Antonio Estache & Atsuhi Iimi, 2008. "Procurement Efficiency for Infrastructure Development and Financial Needs Reassessed," ECARES Working Papers 2008_022, Université Libre de Bruxelles, Ecares. [Downloadable!]
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  9. Aron, Janine & Elbadawi, Ibrahim, 1994. "Foreign exchange auction markets in sub-Saharan Africa : dynamic models for auction exchange rates," Policy Research Working Paper Series 1396, The World Bank. [Downloadable!]
  10. Chow, YuenLeng & Yavas, Abdullah, 2008. "Auctions with Positive Synergies: Experimental Evidence," MPRA Paper 12669, University Library of Munich, Germany. [Downloadable!]
  11. 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). [Downloadable!]
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