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On the Number of Bidders and Auction Performance: when More Means Less

  • Bruno Larue
  • Mohamed Jeddy
  • Sébastien Pouliot

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.

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Paper provided by CREATE in its series Cahiers de recherche CREATE with number 2013-4.

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Date of creation: 2013
Date of revision:
Handle: RePEc:lvl:creacr:2013-4
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  1. repec:ebl:ecbull:v:30:y:2010:i:1:p:429-436 is not listed on IDEAS
  2. 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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  4. repec:tpr:qjecon:v:101:y:1986:i:1:p:1-31 is not listed on IDEAS
  5. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
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  7. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721, October.
  8. Pouliot, Sebastien & Larue, Bruno, 2012. "Import Sensitive Products and Perverse Tariff-Rate Quota Liberalization," Staff General Research Papers 34570, Iowa State University, Department of Economics.
  9. Gervais, Jean-Philippe & Lambert, Remy, 2010. "The Simple Economics of Hog Marketing Reforms in Quebec," Working Papers 102014, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
  10. Thomas Kittsteiner & Jörg Nikutta & Eyal Winter, 2004. "Declining valuations in sequential auctions," International Journal of Game Theory, Springer, vol. 33(1), pages 89-106, January.
  11. Jean-Philippe Gervais & Stephen Devadoss, 2006. "Estimating bargaining strengths of Canadian chicken producers and processors using a bilateral monopoly framework," Agribusiness, John Wiley & Sons, Ltd., vol. 22(2), pages 159-173.
  12. 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.
  13. Gale, Ian L. & Stegeman, Mark, 2001. "Sequential Auctions of Endogenously Valued Objects," Games and Economic Behavior, Elsevier, vol. 36(1), pages 74-103, July.
  14. Krishna, K., 1990. "Auctions with Endogenous Valuations: The Persistence of Monopoly Revisited," Papers 472, Stockholm - International Economic Studies.
  15. Wedad Elmaghraby, 2005. "The Effect of Asymmetric Bidder Size on an Auction's Performance: Are More Bidders Always Better?," Management Science, INFORMS, vol. 51(12), pages 1763-1776, December.
  16. Menicucci Domenico, 2009. "Competition May Reduce the Revenue in a First Price Auction with Affiliated Private Values," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-19, December.
  17. Murray Fulton & Yongmei Tang, 1999. "Testing the Competitiveness of a Multistage Food Marketing System: The Canadian Chicken Industry," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(3), pages 225-250, November.
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