Comparing Open and Sealed Bid Auctions: Theory and Evidence from Timber Auctions

Author

Jonathan Levin, Susan Athey (athey@stanford.edu) and Enrique Seira(enrique.seira@itam.mx)

No 2004.142, Working Papers from  Fondazione Eni Enrico Mattei

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 propose a model, which extends the theory of private value auctions with heterogeneous bidders to capture participation decisions, that can account for these qualitative effects of auction format. We then calibrate the model using parameters estimated from the data and show that the model 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 (search for similar items in EconPapers)
JEL-codes: Q23 D44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-gth and nep-mic
Date: 2004-12
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (18) Track citations by RSS feed

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Related works:
Working Paper: Comparing Open and Sealed Bid Auctions: Theory and Evidence from Timber Auctions (2005) 
Working Paper: Comparing Open and Sealed Bid Auctions: Theory and Evidence from Timber Auctions (2004) 
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