Industry Concentration in Common Value Auctions: Theory and Evidence
18 Pages Posted: 10 May 2006 Last revised: 1 Oct 2012
Date Written: December 1, 2006
Abstract
We examine theoretically and experimentally two countervailing effects of industry concentration in common value auctions. Greater concentration of information among fewer bidders reduces competition but increases the precision of private estimates. We demonstrate that this generally leads to more aggressive bidding. However, the reduction in competition dominates the informational effects, resulting in lower prices. We examine these hypothesized effects experimentally by conducting a series of auctions with constant informational content but distributed among a varying number of bidders. The experimental results are consistent with our theoretical predictions.
Keywords: common value auctions, information, joint bidding, industry concentration
JEL Classification: D44, L41, C92
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Inference with an Incomplete Model of English Auctions
By Philip A. Haile and Elie T. Tamer
-
How to Set Minimum Acceptable Bids, with an Application to Real Estate Auctions
By R. Preston Mcafee, Daniel C. Quan, ...
-
Empirical Implications of Equilibrium Bidding in First-Price, Symmetric, Common Value Auctions
By Kenneth Hendricks, Joris Pinkse, ...
-
Empirical Implications of Equilibrium Bidding in First-Price, Symmetric, Common Value Auctions
By Kenneth Hendricks, Joris Pinkse, ...
-
Nonparametric Tests for Common Values at First-Price Sealed-Bid Auctions
By Philip A. Haile, Han Hong, ...
-
The Role of Information in U.S. Offshore Oil and Gas Lease Auctions
-
Nonparametric Tests for Common Values in Fixed-Price Sealed-Bid Auctions
By Philip A. Haile, Han Hong, ...
-
Comparing Open and Sealed Bid Auctions: Evidence from Timber Auctions
By Susan Athey, Jonathan Levin, ...