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Declining Prices in the Sequential Dutch Flower Auction of Roses

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  • van den Berg, G.
  • van Ours, J.C.

    (Tilburg University, School of Economics and Management)

  • Pradhan, M.P.

Abstract

This discussion paper resulted in an article in the American Economic Review (2001). Volume 91, pages 1055-1062. According to basic models of sequential private value auctions of identical objects, consecutive prices are on average constant or rising. In empirical studies, prices are often found to decline. Several explanations have been put forward for this declining price anomaly. In this paper we analyze data on sequential Dutch auctions of roses from the largest flower auction in the world. We find that there is a substantial price decline and suggest that the presence of a buyer's option, whereby the winner of the first auction has the opportunity to buy the remaining units at the winning price, is a main determinant of the observed price decline. We advance on the empirical literature on sequential auctions by using formal panel data estimation techniques.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • van den Berg, G. & van Ours, J.C. & Pradhan, M.P., 1999. "Declining Prices in the Sequential Dutch Flower Auction of Roses," Other publications TiSEM 174fe3c1-411e-4443-8b18-6, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:174fe3c1-411e-4443-8b18-6dbacbb04d31
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    Cited by:

    1. Kleijnen, Jack P.C. & van Schaik, Frans D.J., 2011. "Sealed-bid auction of Netherlands mussels: Statistical analysis," International Journal of Production Economics, Elsevier, vol. 132(1), pages 154-161, July.
    2. Gerard J. van den Berg & Jan C. van Ours & Menno P. Pradhan, 2001. "The Declining Price Anomaly in Dutch Dutch Rose Auctions," American Economic Review, American Economic Association, vol. 91(4), pages 1055-1062, September.

    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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