Declining Prices in the Sequential Dutch Flower Auction of Roses
AbstractAccording to basic models of sequential private value autions of identical objects, consecutive prices are on average constant or rising. In empirical studies, prices are often found to decline. Several explanations have been put forward for this declining price anomaly. In this paper we analyze data on sequential Dutch auctions of roses from the largest flower auction in the world. We find that there is a substantial price decline and suggest that the presence of a buyer's option, whereby the winner of the first auction has the opportunity to buy the remaining units at the winning price, is a main determinant of the observed price decline. We advance on the empirical literature on sequential auctions by using formal data estimation techniques.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1999-52.
Date of creation: 1999
Date of revision:
Contact details of provider:
Web page: http://center.uvt.nl
sequential auctions; declining prices; buyer's option;
Other versions of this item:
- Berg, Gerard J. van den & Ours, Jan C. van & Pradhan, Menno P., 1999. "Declining prices in the sequential Dutch flower auction of roses," Serie Research Memoranda 0040, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
- Gerard J. van den Berg & Jan C. van Ours & Menno P. Pradhan, 1999. "Declining Prices in the Sequential Dutch Flower Auction of Roses," Tinbergen Institute Discussion Papers 99-074/3, Tinbergen Institute.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Laffont, J.J., 1996.
"Game Theory and Empirical Economics: The Case of Auction Data,"
95.394, Toulouse - GREMAQ.
- Laffont, Jean-Jacques, 1997. "Game theory and empirical economics: The case of auction data 1," European Economic Review, Elsevier, vol. 41(1), pages 1-35, January.
- Fl. Menezes & P.K.Monteiro, 1994.
"Sequential Asymmetric Auctions With Endogenous Participation,"
9402001, EconWPA, revised 09 Jun 1994.
- Flavio Menezes & Paulo Monteiro, 1997. "Sequential asymmetric auctions with endogenous participation," Theory and Decision, Springer, vol. 43(2), pages 187-202, September.
- Victor A. Ginsburgh, 1998.
"Absentee Bidders and the Declining Price Anomaly in Wine Auctions,"
Journal of Political Economy,
University of Chicago Press, vol. 106(6), pages 1302-1331, December.
- Victor Ginsburgh, 1998. "Absentee bidders and the declining price anomaly in wine auctions," ULB Institutional Repository 2013/1701, ULB -- Universite Libre de Bruxelles.
- GINSBURGH, Victor, . "Absentee bidders and the declining price anomaly in wine auctions," CORE Discussion Papers RP -1364, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Victor Ginsburgh & Pierre-Michel Menger, 1996.
"Economics of the Arts: Selected essays,"
ULB Institutional Repository
2013/152420, ULB -- Universite Libre de Bruxelles.
- Orley Ashenfelter & David Genesove, 1992.
"Testing for Price Anomalies in Real Estate Auctions,"
NBER Working Papers
4036, National Bureau of Economic Research, Inc.
- Ashenfelter, Orley & Genesove, David, 1992. "Testing for Price Anomalies in Real-Estate Auctions," American Economic Review, American Economic Association, vol. 82(2), pages 501-05, May.
- Ashenfelter, O. & Genesove, D., 1992. "Testing for Price Anomalies in Real Estate Auctions," Working papers 92-2, Massachusetts Institute of Technology (MIT), Department of Economics.
- Ashenfelter, O. & Genesove, D., 1992. "Testing for Price Anomalies in real Estate Auctions," Papers 128, Princeton, Department of Economics - Financial Research Center.
- Ashenfelter, Orley, 1989. "How Auctions Work for Wine and Art," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 23-36, Summer.
- McAfee R. Preston & Vincent Daniel, 1993. "The Declining Price Anomaly," Journal of Economic Theory, Elsevier, vol. 60(1), pages 191-212, June.
- Black, Jane & De Meza, David, 1992. "Systematic Price Differences between Successive Auctions Are No Anomaly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(4), pages 607-28, Winter.
- Gale Ian L. & Hausch Donald B., 1994. "Bottom-Fishing and Declining Prices in Sequential Auctions," Games and Economic Behavior, Elsevier, vol. 7(3), pages 318-331, November.
- McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
- Bernhardt, Dan & Scoones, David, 1994.
"A Note on Sequential Auctions,"
American Economic Review,
American Economic Association, vol. 84(3), pages 653-57, June.
- Jones, C. & Menezes, F. & Vella, F., 1996.
"Auctions Price Anomalies: Evidence from Wool Auctions in Australia,"
303, Australian National University - Department of Economics.
- Chris Jones & Flavio Menezes & Francis Vella, 2004. "Auction Price Anomalies: Evidence from Wool Auctions in Australia," The Economic Record, The Economic Society of Australia, vol. 80(250), pages 271-288, 09.
- Paul Milgrom & Robert J. Weber, 1981.
"A Theory of Auctions and Competitive Bidding,"
447R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Engelbrecht-Wiggans, Richard, 1994. "Sequential auctions of stochastically equivalent objects," Economics Letters, Elsevier, vol. 44(1-2), pages 87-90.
- Robert J. Weber, 1981. "Multiple-Object Auctions," Discussion Papers 496, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- repec:att:wimass:9215 is not listed on IDEAS
- Branco, Fernando, 1997. "Sequential auctions with synergies: An example," Economics Letters, Elsevier, vol. 54(2), pages 159-163, February.
- von der Fehr, Nils-Henrik Morch, 1994. "Predatory Bidding in Sequential Auctions," Oxford Economic Papers, Oxford University Press, vol. 46(3), pages 345-56, July.
- Kleijnen, Jack P.C. & van Schaik, Frans D.J., 2011. "Sealed-bid auction of Netherlands mussels: Statistical analysis," International Journal of Production Economics, Elsevier, vol. 132(1), pages 154-161, July.
- Gerard J. van den Berg & Jan C. van Ours & Menno P. Pradhan, 2001. "The Declining Price Anomaly in Dutch Dutch Rose Auctions," American Economic Review, American Economic Association, vol. 91(4), pages 1055-1062, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Richard Broekman).
If references are entirely missing, you can add them using this form.