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Bidder Collusion at Forest Service Timber Sales

Author

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  • Baldwin, Laura H
  • Marshall, Robert C
  • Richard, Jean-Francois

Abstract

Allegations of bidder collusion at Forest Service timber sales in the Pacific Northwest were common in the 1970s. Of course, prices may be low for reasons other than collusion. The authors formulate an empirical model that allows for both bidder collusion and supply effects and in which they control for demand conditions. Noncooperative behavior in which a single unit is sold (the standard auction model) is a special case: it is found to be definitively outperformed by a model of collusion. The authors also find that supply effects are dominated by collusion in determining the winning bids in the market. Copyright 1997 by the University of Chicago.

Suggested Citation

  • Baldwin, Laura H & Marshall, Robert C & Richard, Jean-Francois, 1997. "Bidder Collusion at Forest Service Timber Sales," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 657-699, August.
    • Handle: RePEc:ucp:jpolec:v:105:y:1997:i:4:p:657-99
    DOI: 10.1086/262089
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    References listed on IDEAS

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    1. Rosenthal, Robert W., 1993. "Bargaining rules of thumb," Journal of Economic Behavior & Organization, Elsevier, vol. 22(1), pages 15-24, September.
    2. Graham, Daniel A & Marshall, Robert C & Richard, Jean-Francois, 1990. "Differential Payments within a Bidder Coalition and the Shapley Value," American Economic Review, American Economic Association, vol. 80(3), pages 493-510, June.
    3. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    4. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    5. Mailath, George J. & Zemsky, Peter, 1991. "Collusion in second price auctions with heterogeneous bidders," Games and Economic Behavior, Elsevier, vol. 3(4), pages 467-486, November.
    6. Marshall, R.C. & Meurer, M.J., 1995. "Should Bid Rigging Always Be an Antitrust Violation," Papers 7-95-2, Pennsylvania State - Department of Economics.
    7. Graham, Daniel A & Marshall, Robert C, 1987. "Collusive Bidder Behavior at Single-Object Second-Price and English Auctions," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1217-1239, December.
    8. Hansen, Robert G, 1986. "Sealed-Bid versus Open Auctions: The Evidence," Economic Inquiry, Western Economic Association International, vol. 24(1), pages 125-142, January.
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    More about this item

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L73 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Forest Products

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