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Auction versus direct sale: the effect of buyers and sellers on prices

Author

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  • Geir Sogn-Grundvåg
  • Dengjun Zhang

Abstract

This study examines the question of selling agricultural commodities by auction or directly. Hedonic price analysis using transaction data from the sale of frozen cod in Norway shows that buyer–seller matches explain 32.4 and 13.6 per cent of the price variation in direct sales and auctions, respectively, indicating that direct sales are more informationally efficient than auctions. Meanwhile, auctions gain a price premium of 2.6 per cent over direct sales, holding other variables constant. However, a substantial increase in the use of direct sales indicates that their information efficiency is more important to sellers than the small price premium provided by auctions.

Suggested Citation

  • Geir Sogn-Grundvåg & Dengjun Zhang, 2023. "Auction versus direct sale: the effect of buyers and sellers on prices," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(1), pages 84-114.
    • Handle: RePEc:oup:erevae:v:50:y:2023:i:1:p:84-114.
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    File URL: http://hdl.handle.net/10.1093/erae/jbab051
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