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On The Number Of Bidders And Auction Performance: When More Means Less

Author

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  • Larue, Bruno
  • Jeddy, Mohamed
  • Pouliot, Sébastien

Abstract

Dans un contexte d’enchères séquentielles multi-unitaires, en information complète, on montre que le revenu du vendeur peut augmenter ou diminuer lorsque le nombre d’enchérisseurs augmente, et ce même si un des nouveaux enchérisseurs gagne un des objets. Nous avons recours à des données de l’enchère électronique du porc pour analyser empiriquement l’incidence d’enchérisseurs additionnel sur le prix moyen. Notre méthode d’estimation tient compte de l’endogénéité des invitations lancées à des abattoirs à l’extérieur du Québec. Nous avons identifié un effet négatif que nous expliquons par le fait que l’ajout d’enchérisseurs augmente la concurrence sur les derniers lots mis en vente, mais pas nécessairement sur les premiers......We first show in the context of sequential multi-unit auctions under complete information that a seller’s revenue may increase or decrease as the number of buyers increases, even when the additional bidders win an object. We use data from the Quebec daily hog auction to empirically analyze the effect of invitations extended to bidders from Ontario. Our estimation accounts for the endogenous timing of these rare invitations, but we nevertheless uncover a negative “invitation” effect. We attribute this anti-competitive effect to the fact that the addition of bidders increases competition in late rounds, but not necessarily in early ones.

Suggested Citation

  • Larue, Bruno & Jeddy, Mohamed & Pouliot, Sébastien, 2013. "On The Number Of Bidders And Auction Performance: When More Means Less," Working Papers 156465, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
  • Handle: RePEc:ags:spaawp:156465
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    References listed on IDEAS

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    1. Katzman, Brett, 1999. "A Two Stage Sequential Auction with Multi-Unit Demands," Journal of Economic Theory, Elsevier, vol. 86(1), pages 77-99, May.
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    9. Mohamed Jeddy & Bruno Larue & Jean-philippe Gervais, 2010. "Allocations and Price Trends in Sequential Auctions under Complete Information with Symmetric Bidders," Economics Bulletin, AccessEcon, vol. 30(1), pages 429-436.
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    Keywords

    Auctions; livestock; competition; price; Institutional and Behavioral Economics; Livestock Production/Industries; Marketing; D44; C23;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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