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Choice of Auction or Negotiation in Linked Laboratory Markets: Cattle Market Implications

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  • Phillips, Owen R.
  • Bastian, Christopher T.
  • Cook, Benjamin R.
  • Menkhaus, Dale J.
  • Gao, Shen

Abstract

We analyze behavior and market outcomes when agents face an endogenous choice of trading in either English auction or private negotiation. We develop a theoretical model to illustrate agent value for a trading institution. We then conduct market experiments with stable supply and demand conditions and sequentially linked English auction then negotiation (or auction then negotiation) institutions, allowing agents transaction institution choice. Linked prices converge to levels between those observed in auction or negotiation alone. Quantities sold and total welfare increases in these linked markets. Our results extend the literature and offer insights for both fed and feeder cattle markets.

Suggested Citation

  • Phillips, Owen R. & Bastian, Christopher T. & Cook, Benjamin R. & Menkhaus, Dale J. & Gao, Shen, 2025. "Choice of Auction or Negotiation in Linked Laboratory Markets: Cattle Market Implications," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360827, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea25:360827
    DOI: 10.22004/ag.econ.360827
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    References listed on IDEAS

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    4. Muth, Mary K. & Liu, Yanyan & Koontz, Stephen R. & Lawrence, John D., 2008. "Differences in Prices and Price Risk Across Alternative Marketing Arrangements Used in the Fed Cattle Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(01), pages 1-18, April.
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