Potential Competition and Possible Collusion in Forest Service Timber Auctions

Economic Inquiry, 1996, vol. 34, issue 4, pages 730-45

Abstract: Potential competition significantly affects the size of winning bids in Forest Service sealed-bid timber auctions and has little effect on winning bids in oral auctions. Winning sealed bids depend even more, however, on actual competition, a result suggesting collusion. This explanation is supported using an index representing the likelihood an auction was rigged. Preclusive bidding (a type of collusion) in oral auctions is indicated by a positive relationship between hauling distances and the size of winning sealed bids. Comparisons of winning-bid variances, overbids, and numbers of bidders across auction type support this explanation of oral auction prices. Copyright 1996 by Oxford University Press.

Date: 1996
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