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On the Number of Bidders and Auction Performance: when More Means Less

Author

Listed:
  • Bruno Larue
  • Mohamed Jeddy
  • Sébastien Pouliot

Abstract

We first show in the context of sequential multi-unit auctions under complete information that a seller’s revenue may increase or decrease as the number of buyers increases, even when the additional bidders win an object. We use data from the Quebec daily hog auction to empirically analyze the effect of invitations extended to bidders from Ontario. Our estimation accounts for the endogenous timing of these rare invitations, but we nevertheless uncover a negative “invitation” effect. We attribute this anti-competitive effect to the fact that the addition of bidders increases competition in late rounds, but not necessarily in early ones.

Suggested Citation

  • Bruno Larue & Mohamed Jeddy & Sébastien Pouliot, 2013. "On the Number of Bidders and Auction Performance: when More Means Less," Cahiers de recherche CREATE 2013-4, CREATE.
    • Handle: RePEc:lvl:creacr:2013-4
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    References listed on IDEAS

    as
    1. Thomas Kittsteiner & Jörg Nikutta & Eyal Winter, 2004. "Declining valuations in sequential auctions," International Journal of Game Theory, Springer;Game Theory Society, vol. 33(1), pages 89-106, January.
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    3. Sébastien Pouliot & Bruno Larue, 2012. "Import sensitive products and perverse tariff‐rate quota liberalization," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(3), pages 903-924, August.
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    5. Joris Pinkse & Guofu Tan, 2005. "The Affiliation Effect in First-Price Auctions," Econometrica, Econometric Society, vol. 73(1), pages 263-277, January.
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    8. Gervais, Jean-Philippe & Lambert, Remy, 2010. "The Simple Economics of Hog Marketing Reforms in Quebec," Working Papers 102014, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
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    12. Mohamed Jeddy & Bruno Larue & Jean-philippe Gervais, 2010. "Allocations and Price Trends in Sequential Auctions under Complete Information with Symmetric Bidders," Economics Bulletin, AccessEcon, vol. 30(1), pages 429-436.
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    More about this item

    Keywords

    Auctions; Livestock; Competition; Price;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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