Comparing Open and Sealed Bid Auctions: Evidence from Timber Auctions

48 Pages Posted: 29 Dec 2008 Last revised: 15 May 2022

See all articles by Susan Athey

Susan Athey

Stanford Graduate School of Business

Jonathan Levin

Stanford Graduate School of Business; Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Enrique Seira

Stanford University - Department of Economics

Date Written: December 2008

Abstract

We study entry and bidding patterns in sealed bid and open auctions with heterogeneous bidders. Using data from U.S. Forest Service timber auctions, we document a set of systematic effects of auction format: sealed bid auctions attract more small bidders, shift the allocation towards these bidders, and can also generate higher revenue. We show that a private value auction model with endogenous participation can account for these qualitative effects of auction format. We estimate the model's parameters and show that it can explain the quantitative effects as well. Finally, we use the model to provide an assessment of bidder competitiveness, which has important consequences for auction choice.

Suggested Citation

Carleton Athey, Susan and Levin, Jonathan D. and Seira, Enrique, Comparing Open and Sealed Bid Auctions: Evidence from Timber Auctions (December 2008). NBER Working Paper No. w14590, Available at SSRN: https://ssrn.com/abstract=1320836

Susan Carleton Athey

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Jonathan D. Levin (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Enrique Seira

Stanford University - Department of Economics ( email )

Stanford, CA 94305
United States

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