What is the Cost of Low Participation in French Timber Auctions?

Document de recherche du LAMETA DR No. 2010-08

35 Pages Posted: 3 Sep 2010  

Raphaele Preget

National Institute for Agricultural Research (INRA) - UMR Economie Publique

Patrick Waelbroeck

Telecom ParisTech

Date Written: August 2010

Abstract

How much is the timber from public forests worth? How can the Public Forest Service define a fair market price for standing timber lots? What is the cost of low participation in French timber auctions? To estimate the value of a timber lot we adopt the transaction-evidence appraisal approach using data from timber auctions in Lorraine (Eastern France) accounting for the facts that: (i) the seller’s reserve prices are secret, (ii) there remain many unsold lots, and (iii) the number of bidders varies from one auction to another. Taking into account the endogenous participation in our hedonic price equation for the highest bid, we estimate that, compared to lots that receive two bids, the highest bid is 22% lower when there is only one bid and 37% higher when there are three or more bids.

Keywords: Timber auctions, hedonic prices, sample selection, endogenous participation

JEL Classification: C11, C15, C34, C35, C63, D44, L73

Suggested Citation

Preget, Raphaele and Waelbroeck, Patrick, What is the Cost of Low Participation in French Timber Auctions? (August 2010). Document de recherche du LAMETA DR No. 2010-08. Available at SSRN: https://ssrn.com/abstract=1670704 or http://dx.doi.org/10.2139/ssrn.1670704

Raphaele Preget

National Institute for Agricultural Research (INRA) - UMR Economie Publique ( email )

Centre de Grignon
BP01
Thiverval-Grignon, 78850
France

Patrick Waelbroeck (Contact Author)

Telecom ParisTech ( email )

46 rue Barrault
F-75634 Paris, Cedex 13
France

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