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A Note on First-Price Sealed-Bid Cattle Auctions in the Presence of Captive Supplies

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  • Crespi, John M.
  • Xia, Tian

Abstract

The authors present an analytical model of a first-price sealed-bid cattle auction in which a spot and coordinated markets are interconnected. The model reveals that the conventional wisdom that market coordination negatively affects the bid price in the spot market is an oversimplification. The relationships between key market variables impact bids and bid shading in complex ways. While captive supplies can lead to lower spot prices, the price reductions do not necessarily stem from an increase in market power due to contracting. The model emphasizes the importance of several variables for future empirical studies.

Suggested Citation

  • Crespi, John M. & Xia, Tian, 2015. "A Note on First-Price Sealed-Bid Cattle Auctions in the Presence of Captive Supplies," Agricultural and Resource Economics Review, Cambridge University Press, vol. 44(3), pages 340-345, December.
    • Handle: RePEc:cup:agrerw:v:44:y:2015:i:03:p:340-345_00
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    Cited by:

    1. Melissa G.S. McKendree & Tina L. Saitone & K. Aleks Schaefer, 2021. "Oligopsonistic Input Substitution in a Thin Market," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(4), pages 1414-1432, August.
    2. Brorsen B. Wade & Fain James R. & Maples Joshua G., 2018. "Alternative Policy Responses to Increased Use of Formula Pricing," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 16(1), pages 1-11, January.
    3. McKendree, Melissa G. S. & Saitone, Tina L. & Schaefer, K Aleks, 2020. "Cattle Cycle Dynamics in a Modern Agricultural Market: Competition in Holstein Cattle Procurement," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304380, Agricultural and Applied Economics Association.

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