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On the Number of Bidders and Auction Performance: when More Means Less

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  • Larue, Bruno
  • Jeddy, Mohamed
  • Pouliot, Sébastien

Abstract

We first show in the context of sequential multi-unit auctions under complete information that a seller’s revenue may increase or decrease as the number of buyers increases, even when the additional bidders win an object. We use data from the Quebec daily hog auction to empirically analyze the effect of invitations extended to bidders from Ontario. Our estimation accounts for the endogenous timing of these rare invitations, but we nevertheless uncover a negative “invitation” effect. We attribute this anti-competitive effect to the fact that the addition of bidders increases competition in late rounds, but not necessarily in early ones.

Suggested Citation

  • Larue, Bruno & Jeddy, Mohamed & Pouliot, Sébastien, 2013. "On the Number of Bidders and Auction Performance: when More Means Less," Working Papers 155951, University of Laval, Center for Research on the Economics of the Environment, Agri-food, Transports and Energy (CREATE).
    • Handle: RePEc:ags:ulavwp:155951
    DOI: 10.22004/ag.econ.155951
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    References listed on IDEAS

    as
    1. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721.
    2. John M. Crespi & Richard J. Sexton, 2004. "Bidding for Cattle in the Texas Panhandle," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 660-674.
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    5. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    6. Sébastien Pouliot & Bruno Larue, 2012. "Import sensitive products and perverse tariff‐rate quota liberalization," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(3), pages 903-924, August.
    7. Mohamed Jeddy & Bruno Larue & Jean-philippe Gervais, 2010. "Allocations and Price Trends in Sequential Auctions under Complete Information with Symmetric Bidders," Economics Bulletin, AccessEcon, vol. 30(1), pages 429-436.
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    More about this item

    Keywords

    Livestock Production/Industries;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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