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Comparing open and Sealed Bid Auctions: Evidence from Timber Auctions

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  • Susan Athey
  • Jonathan Levin
  • Enrique Seira

Abstract

We study entry and bidding patterns in sealed bid and open auctions. Using data from the U.S. Forest Service timber auctions, we document a set of systematic effects: sealed bid auctions attract more small bidders, shift the allocation toward these bidders, and can also generate higher revenue. A private value auction model with endogenous participation can account for these qualitative effects of auction format. We estimate the model's parameters and show that it can explain the quantitative effects as well. We then use the model to assess bidder competitiveness, which has important consequences for auction design. Copyright 2011, Oxford University Press.

Suggested Citation

  • Susan Athey & Jonathan Levin & Enrique Seira, 2011. "Comparing open and Sealed Bid Auctions: Evidence from Timber Auctions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(1), pages 207-257.
    • Handle: RePEc:oup:qjecon:v:126:y:2011:i:1:p:207-257
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    File URL: http://hdl.handle.net/10.1093/qje/qjq001
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    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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