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Demand Curve Effects in Experimental Auctions: The Effect of Quantity Already Owned

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  • Colson, Gregory
  • Huffman, Wallace E.
  • Rousu, Matthew C.

Abstract

Most studies utilizing experimental auction mechanisms to elicit consumers’ willingness to pay are designed to avoid potential substitution or demand-curve effects that may influence bid prices. However, previous research and auction designs have not considered the potential impact on bid prices of commodity inventories held by auction participants that were obtained through transactions outside of the auction. This omission may present a problem for interpreting and analyzing auction data. Using bids from a random nth-price auction of fresh vegetables conducted in a laboratory style setting, we test whether participants’ outside inventories affect bidding behavior. We find that bidders do in fact consider their inventories, resulting in lower bid prices by individuals with quantity already owned.

Suggested Citation

  • Colson, Gregory & Huffman, Wallace E. & Rousu, Matthew C., 2009. "Demand Curve Effects in Experimental Auctions: The Effect of Quantity Already Owned," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49551, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea09:49551
    DOI: 10.22004/ag.econ.49551
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    References listed on IDEAS

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    Consumer/Household Economics; Demand and Price Analysis;

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