Auction Prices, Market Share, and a Common Agent

The Australian National University – Centre for Applied Macroeconomic Analysis Working Paper No. 24/2011

44 Pages Posted: 20 Jul 2011

See all articles by Kalyn T. Coatney

Kalyn T. Coatney

U.S. Department of Agriculture - Competition Unit - Grain Inspection, Packers and Stockyards Administration

Sherrill Shaffer

University of Wyoming

Dale J. Menkhaus

University of Wyoming

Date Written: July 1, 2011

Abstract

The primary pro-competitive justification for multiple principals to hire a common bidding agent is efficiency. The efficiency gained by doing so increases the advantage of the common bidding agent. Almost common value auction theory predicts that an advantaged bidder is able to reduce competition by credibly enhancing the ‘winner’s curse’ of disadvantaged rivals. The credible threat results in disadvantaged rivals exiting the bidding process early, leaving the advantaged bidder to purchase most, if not all, units at lower prices than when rivals have common values. The results of our empirical study of a common bidding agent are consistent with this theory.

Suggested Citation

Coatney, Kalyn T. and Shaffer, Sherrill and Menkhaus, Dale J., Auction Prices, Market Share, and a Common Agent (July 1, 2011). The Australian National University – Centre for Applied Macroeconomic Analysis Working Paper No. 24/2011. Available at SSRN: https://ssrn.com/abstract=1888735 or http://dx.doi.org/10.2139/ssrn.1888735

Kalyn T. Coatney

U.S. Department of Agriculture - Competition Unit - Grain Inspection, Packers and Stockyards Administration

1 Gateway Center
3950 Lewiston, Suite 200
Aurora, CO 80011
United States
303-375-4240 (Phone)
303-371-4609 (Fax)

Sherrill Shaffer (Contact Author)

University of Wyoming ( email )

P.O. Box 3985
Laramie, WY 82071-3985
United States
307-766-2173 (Phone)
307-766-5090 (Fax)

Dale J. Menkhaus

University of Wyoming ( email )

Box 3434 University Station
Department of Applied Agricultural Economics
Laramie, WY 82071
United States
307-766-5128 (Phone)
307-766-5544 (Fax)

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