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Reserve Prices and Bidder Participation in an English Auction: The Case of Atlantic Cod in Norway

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  • Dengjun Zhang
  • Geir Sogn-Grundvåg

Abstract

This study investigates the impact of reserve prices on bidder participation in the main Norwegian auction market for frozen Atlantic cod. Theoretically, there is a negative relationship between reserve prices and bidder participation. However, our empirical findings show that the reserve price actually has no negative influence on bidder participation. A simulation exercise taking buyers’ true valuations into account also shows a negligible effect of reserve prices on the probability of two or more participating bidders. Other factors are more important in attracting bidders to the auction. Most notably, cod caught by longline, which implies fish of high quality, enhances the probability of two or more bidders by 11.8%. Auctioneers should focus on information transparency regarding fish quality to attract participants and hence improve the efficiency of auction markets.

Suggested Citation

  • Dengjun Zhang & Geir Sogn-Grundvåg, 2023. "Reserve Prices and Bidder Participation in an English Auction: The Case of Atlantic Cod in Norway," Marine Resource Economics, University of Chicago Press, vol. 38(3), pages 249-261.
    • Handle: RePEc:ucp:mresec:doi:10.1086/725003
    DOI: 10.1086/725003
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