[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/wly/econjl/v127y2017i605pf351-f371.html
   My bibliography  Save this article

Auction Format and Auction Sequence in Multi‐item Multi‐unit Auctions: An Experimental Study

Author

Listed:
  • Regina Betz
  • Ben Greiner
  • Sascha Schweitzer
  • Stefan Seifert
Abstract
We experimentally study the effect of auction format (sealed‐bid versus closed clock versus open clock) and auction sequence (simultaneous versus sequential) on bidding behaviour and auction outcomes in auctions of multiple related multi‐unit items. Prominent field applications are the sale of emission permits, fishing rights, and electricity. We find that, when auctioning simultaneously, clock auctions outperform sealed‐bid auctions in terms of efficiency and revenues. This advantage disappears when the items are auctioned sequentially. In addition, auctioning sequentially has positive effects on total revenues across all auction formats, resulting from fiercer competition on the item auctioned first.

Suggested Citation

  • Regina Betz & Ben Greiner & Sascha Schweitzer & Stefan Seifert, 2017. "Auction Format and Auction Sequence in Multi‐item Multi‐unit Auctions: An Experimental Study," Economic Journal, Royal Economic Society, vol. 127(605), pages 351-371, October.
    • Handle: RePEc:wly:econjl:v:127:y:2017:i:605:p:f351-f371
    DOI: 10.1111/ecoj.12403
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ecoj.12403
    Download Restriction: no
    File URL: https://libkey.io/10.1111/ecoj.12403?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alvin E. Roth, 2009. "What Have We Learned from Market Design?," Innovation Policy and the Economy, University of Chicago Press, vol. 9(1), pages 79-112.
    2. Cramton, Peter & Kerr, Suzi, 2002. "Tradeable carbon permit auctions: How and why to auction not grandfather," Energy Policy, Elsevier, vol. 30(4), pages 333-345, March.
    3. Ashenfelter, Orley, 1989. "How Auctions Work for Wine and Art," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 23-36, Summer.
    4. Porter, David & Rassenti, Stephen & Shobe, William & Smith, Vernon & Winn, Abel, 2009. "The design, testing and implementation of Virginia's NOx allowance auction," Journal of Economic Behavior & Organization, Elsevier, vol. 69(2), pages 190-200, February.
    5. Dallas Burtraw & Jacob Goeree & Charles A. Holt & Erica Myers & Karen Palmer & William Shobe, 2009. "Collusion in auctions for emission permits: An experimental analysis," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 28(4), pages 672-691.
    6. Michel Mougeot & Florence Naegelen & Benjamin Pelloux & Jean‐Louis Rullière, 2011. "Breaking Collusion in Auctions through Speculation: An Experiment on CO 2 Emission Permit Markets," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 13(5), pages 829-856, October.
    7. Cason, Timothy N. & Plott, Charles R., 1996. "EPA's New Emissions Trading Mechanism: A Laboratory Evaluation," Journal of Environmental Economics and Management, Elsevier, vol. 30(2), pages 133-160, March.
    8. Alvin E. Roth & Axel Ockenfels, 2002. "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," American Economic Review, American Economic Association, vol. 92(4), pages 1093-1103, September.
    9. Shobe, William & Palmer, Karen & Myers, Erica & Holt, Charles & Goeree, Jacob & Burtraw, Dallas, 2010. "An Experimental Analysis of Auctioning Emission Allowances Under a Loose Cap," Agricultural and Resource Economics Review, Cambridge University Press, vol. 39(2), pages 162-175, April.
    10. Kagel, John H & Levin, Dan, 2001. "Behavior in Multi-unit Demand Auctions: Experiments with Uniform Price and Dynamic Vickrey Auctions," Econometrica, Econometric Society, vol. 69(2), pages 413-454, March.
    11. Giuseppe Lopomo & Leslie M. Marx & David McAdams & Brian Murray, 2011. "Carbon Allowance Auction Design: An Assessment of Options for the United States," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 25-43, Winter.
    12. David McAdams & Giuseppe Lopomo & Leslie Marx & Brian Murray, "undated". "Carbon Allowance Auction Design: An Assessment of Options for the U.S," Working Papers 10-64, Duke University, Department of Economics.
    13. Jacob Goeree & Theo Offerman & Randolph Sloof, 2013. "Demand reduction and preemptive bidding in multi-unit license auctions," Experimental Economics, Springer;Economic Science Association, vol. 16(1), pages 52-87, March.
    14. Peter Cramton, 1997. "The FCC Spectrum Auctions: An Early Assessment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 431-495, September.
    15. Claudio Mezzetti, 2011. "Sequential Auctions with Informational Externalities and Aversion to Price Risk: Decreasing and Increasing Price Sequences," Economic Journal, Royal Economic Society, vol. 121(555), pages 990-1016, September.
    16. Charles A. Holt & William Shobe & Dallas Burtraw & Karen Palmer & Jacob K. Goeree, 2007. "Auction Design for Selling CO2 Emission Allowances Under the Regional Greenhouse Gas Initiative," Reports 2007-03, Center for Economic and Policy Studies.
    17. Paul Klemperer, 2010. "The Product-Mix Auction: A New Auction Design for Differentiated Goods," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 526-536, 04-05.
    18. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721, September.
    19. Unknown, 2005. "Forward," 2005 Conference: Slovenia in the EU - Challenges for Agriculture, Food Science and Rural Affairs, November 10-11, 2005, Moravske Toplice, Slovenia 183804, Slovenian Association of Agricultural Economists (DAES).
    20. R. Preston McAfee & John McMillan, 1996. "Analyzing the Airwaves Auction," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 159-175, Winter.
    21. McAfee R. Preston & Vincent Daniel, 1993. "The Declining Price Anomaly," Journal of Economic Theory, Elsevier, vol. 60(1), pages 191-212, June.
    22. Stefan Seifert, 2006. "Posted Price Offers in Internet Auction Markets," Lecture Notes in Economics and Mathematical Systems, Springer, number 978-3-540-35268-6, October.
    23. Karl-Martin Ehrhart & Christian Hoppe & Joachim Schleich & Stefan Seifert, 2005. "The role of auctions and forward markets in the EU ETS: counterbalancing the cost-inefficiencies of combining generous allocation with a ban on banking," Climate Policy, Taylor & Francis Journals, vol. 5(1), pages 31-46, January.
    24. John McMillan, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-162, Summer.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Theo Offerman & Giorgia Romagnoli & Andreas Ziegler, 2022. "Why are open ascending auctions popular? The role of information aggregation and behavioral biases," Quantitative Economics, Econometric Society, vol. 13(2), pages 787-823, May.
    2. Welisch, Marijke, 2019. "Multi-unit renewables auctions for small markets - Designing the Danish multi-technology auction scheme," Renewable Energy, Elsevier, vol. 131(C), pages 372-380.
    3. Ehrhart, Karl-Martin & Ott, Marion & Seifert, Stefan & Wang, Runxi, 2024. "Combinatorial auctions for renewable energy — potentials and challenges," Energy Policy, Elsevier, vol. 186(C).
    4. Lange, Sebastian & Sokolowski, Peter & Yu, Xinghuo, 2022. "An efficient, open-bid procurement auction for small-scale electricity markets," Applied Energy, Elsevier, vol. 314(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Haoran He & Yefeng Chen, 2021. "Auction mechanisms for allocating subsidies for carbon emissions reduction: an experimental investigation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(2), pages 387-430, August.
    2. David McAdams & Giuseppe Lopomo & Leslie Marx & Brian Murray, "undated". "Carbon Allowance Auction Design: An Assessment of Options for the U.S," Working Papers 10-64, Duke University, Department of Economics.
    3. Giuseppe Lopomo & Leslie M. Marx & David McAdams & Brian Murray, 2011. "Carbon Allowance Auction Design: An Assessment of Options for the United States," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 25-43, Winter.
    4. Holt, Charles A. & Shobe, William M., 2016. "Reprint of: Price and quantity collars for stabilizing emission allowance prices: Laboratory experiments on the EU ETS market stability reserve," Journal of Environmental Economics and Management, Elsevier, vol. 80(C), pages 69-86.
    5. Axel Ockenfels & David Reiley & Abdolkarim Sadrieh, 2006. "Online Auctions," NBER Working Papers 12785, National Bureau of Economic Research, Inc.
    6. Alexander Teytelboym & Shengwu Li & Scott Duke Kominers & Mohammad Akbarpour & Piotr Dworczak, 2021. "Discovering Auctions: Contributions of Paul Milgrom and Robert Wilson," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(3), pages 709-750, July.
    7. Committee, Nobel Prize, 2020. "Improvements to auction theory and inventions of new auction formats," Nobel Prize in Economics documents 2020-2, Nobel Prize Committee.
    8. Betz, Regina & Seifert, Stefan & Cramton, Peter & Kerr, Suzi, 2010. "Auctioning greenhouse gas emissions permits in Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(2), pages 1-20.
    9. Stefan Weishaar, 2007. "CO 2 emission allowance allocation mechanisms, allocative efficiency and the environment: a static and dynamic perspective," European Journal of Law and Economics, Springer, vol. 24(1), pages 29-70, August.
    10. Sunnevåg, Kjell J., 2001. "Auction design for the allocation of multiple units of a homogenous good: Theoretical background and practical experience," University of California at Santa Barbara, Economics Working Paper Series qt6wh704p7, Department of Economics, UC Santa Barbara.
    11. Veronika Grimm & Lyuba Ilieva, 2013. "An experiment on emissions trading: the effect of different allocation mechanisms," Journal of Regulatory Economics, Springer, vol. 44(3), pages 308-338, December.
    12. Elena Katok & Alvin E. Roth, 2004. "Auctions of Homogeneous Goods with Increasing Returns: Experimental Comparison of Alternative "Dutch" Auctions," Management Science, INFORMS, vol. 50(8), pages 1044-1063, August.
    13. Alessandra Casella & Adam B. Cox, 2018. "A Property Rights Approach to Temporary Work Visas," The Journal of Legal Studies, University of Chicago Press, vol. 47(S1), pages 195-227.
    14. Christopher M. Anderson & Daniel S. Holland, 2006. "Auctions for Initial Sale of Annual Catch Entitlement," Land Economics, University of Wisconsin Press, vol. 82(3), pages 333-352.
    15. Dallas Burtraw & Jacob Goeree & Charles Holt & Erica Myers & Karen Palmer & William Shobe, 2011. "Price Discovery in Emissions Permit Auctions," Research in Experimental Economics, in: Experiments on Energy, the Environment, and Sustainability, pages 11-36, Emerald Group Publishing Limited.
    16. Lawrence M. Ausubel & Peter Cramton & Paul Milgrom, 2012. "System and Method for a Hybrid Clock and Proxy Auction," Papers of Peter Cramton 12acmhc, University of Maryland, Department of Economics - Peter Cramton, revised 2012.
    17. Cramton, Peter C, 1995. "Money Out of Thin Air: The Nationwide Narrowband PCS Auction," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(2), pages 267-343, Summer.
    18. Lawrence M. Ausubel & Peter Cramton & Marek Pycia & Marzena Rostek & Marek Weretka, 2014. "Demand Reduction and Inefficiency in Multi-Unit Auctions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(4), pages 1366-1400.
    19. Audrey Hu & Liang Zou, 2014. "Sequential Auctions, Price Trends, and Risk Preferences," Tinbergen Institute Discussion Papers 14-139/I, Tinbergen Institute.
    20. Kaplan, Todd R. & Zamir, Shmuel, 2015. "Advances in Auctions," Handbook of Game Theory with Economic Applications,, Elsevier.

    More about this item

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:econjl:v:127:y:2017:i:605:p:f351-f371. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/resssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.