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Comparing Open and Sealed Bid Auctions: Evidence from Timber Auctions

Author

Listed:
  • Susan Athey

    (Department of Economics, Stanford University)

  • Jonathan Levin

    () (Stanford University)

  • Enrique Seira

    (Stanford University)

Abstract

We study entry and bidding patterns in sealed bid and open auctions with heterogeneous bidders. Using data from U.S. Forest Service timber auctions, we document a set of systematic effects of auction format: sealed bid auctions attract more small bidders, shift the allocation towards these bidders, and can also generate higher revenue. We show that 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. Finally, we use the model to provide an assessment of bidder competitiveness, which has important consequences for auction choice.

Suggested Citation

  • Susan Athey & Jonathan Levin & Enrique Seira, 2008. "Comparing Open and Sealed Bid Auctions: Evidence from Timber Auctions," Discussion Papers 08-012, Stanford Institute for Economic Policy Research.
  • Handle: RePEc:sip:dpaper:08-012
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Open Auction; Sealed Bid Auction;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General

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