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Simultaneous Allocation of Bundled Goods Through Auctions: Assessing the Case for Joint Bidding

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  • Daniel Rondeau

    ()

  • Pascal Courty
  • Maurice Doyon

    ()

Abstract

We use the experimental method to study the costs and benefits of allowing joint bidding in simultaneous multi-unit first price sealed bid auctions for bundled goods. The research has immediate applications to the sale of public forest stands that arbor a mixture of species. Joint bidding and communication raise the prospect of higher allocative efficiency, but also of collusive bidding through a reduction in the number of bidders and a greater scope for the formation of bidding rings. However, we find that allowing joint bidding has a significant positive impact on efficiency and reduces collusion significantly. We also explore the robustness of the results to characteristics of the auction environment that are relevant to timber auctions.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 2013s-37.

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Date of creation: 01 Sep 2013
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Handle: RePEc:cir:cirwor:2013s-37

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Keywords: Timber auctions; forest industry; joint bidding; bidding rings; collusion; simultaneous auction; starting price; two bidder rule;

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  1. Dallas Burtraw & Jacob Goeree & Charles A. Holt & Erica Myers & Karen Palmer & William Shobe, 2009. "Collusion in auctions for emission permits: An experimental analysis," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 28(4), pages 672-691.
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  10. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, vol. 82(5), pages 1293-306, December.
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  12. Marshall, R.C. & Richard J.F., 1995. "Bider Collusion at Forest Service Timber Sales," Papers 7-95-3, Pennsylvania State - Department of Economics.
  13. d'ASPREMONT, Claude & JACQUEMIN, Alexis, . "Cooperative and noncooperative R&D in duopoly with spillovers," CORE Discussion Papers RP -823, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. Chernomaz, Kirill, 2012. "On the effects of joint bidding in independent private value auctions: An experimental study," Games and Economic Behavior, Elsevier, vol. 76(2), pages 690-710.
  15. Suetens, S., 2003. "Does R&D Cooperation Facilitate Price Collusion? An Experiment," Discussion Paper 2003-99, Tilburg University, Center for Economic Research.
  16. Kenneth HENDRICKS & Robert H. PORTER, 1989. "Collusion in Auctions," Annales d'Economie et de Statistique, ENSAE, issue 15-16, pages 217-230.
  17. Tong Li & Isabelle Perrigne, 2003. "Timber Sale Auctions with Random Reserve Prices," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 189-200, February.
  18. Brannman, Lance Eric, 1996. "Potential Competition and Possible Collusion in Forest Service Timber Auctions," Economic Inquiry, Western Economic Association International, vol. 34(4), pages 730-45, October.
  19. Lebrun, Bernard, 1999. "First Price Auctions in the Asymmetric N Bidder Case," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 125-42, February.
  20. Suetens, Sigrid, 2005. "Cooperative and noncooperative R&D in experimental duopoly markets," International Journal of Industrial Organization, Elsevier, vol. 23(1-2), pages 63-82, February.
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