Working Paper: NBER ID: w14590
Authors: Susan Athey; Jonathan Levin; Enrique Seira
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.
Keywords: auctions; timber; bidding; entry; revenue
JEL Codes: D44; D82; L13; L40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| sealed bid auctions (D44) | more participation by small firms (L25) |
| sealed bid auctions (D44) | higher probability of winning for loggers (Q23) |
| sealed bid auctions (D44) | higher winning bids (D44) |
| open auctions (D44) | similar participation by larger firms (L25) |