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Competition and Bidding Behavior: Some Evidence from the Rice Market

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  • Meyer, Donald J

Abstract

When objects have uncertain value, the net effect of competition in sealed-bid auctions is ambiguous. The risk of succumbing to the "winner's curse" generally causes bidders to exhibit a nonaggressive response in addition to the standard competitive effect. Sellers can influence the size of the nonaggressive effect by responding to the value uncertainty. This paper focuses specifically on individual bidding behavior in a rice auction market in which sellers issue a product-quality guarantee. The empirical evidence supports the author's hypothesis that such a guarantee negates the significance of the nonaggressive bidder response. Copyright 1988 by Oxford University Press.

Suggested Citation

  • Meyer, Donald J, 1988. "Competition and Bidding Behavior: Some Evidence from the Rice Market," Economic Inquiry, Western Economic Association International, vol. 26(1), pages 123-132, January.
    • Handle: RePEc:oup:ecinqu:v:26:y:1988:i:1:p:123-32
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    Cited by:

    1. Brorsen B. Wade & Fain James R. & Maples Joshua G., 2018. "Alternative Policy Responses to Increased Use of Formula Pricing," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 16(1), pages 1-11, January.
    2. Tostao, Emilio & Chung, Chanjin & Brorsen, B. Wade, 2006. "Integrating the Structural Auction Approach and Traditional Measures of Market Power," 2006 Annual meeting, July 23-26, Long Beach, CA 21244, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Christopher Boyer & B. Brorsen, 2014. "Implications of a Reserve Price in an Agent-Based Common-Value Auction," Computational Economics, Springer;Society for Computational Economics, vol. 43(1), pages 33-51, January.
    4. James M. MacDonald & Charles R. Handy & Gerald E. Plato, 2002. "Competition and Prices in USDA Commodity Procurement," Southern Economic Journal, John Wiley & Sons, vol. 69(1), pages 128-143, July.
    5. Christopher Boyer & B. Brorsen & Tong Zhang, 2014. "Common-value auction versus posted-price selling: an agent-based model approach," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 9(1), pages 129-149, April.

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