Competition Between Auctions

Even though auctions are capturing an increasing share of commerce, they are typically treated in the theoretical economics literature as isolated. That is, an auction is typically treated as a single seller facing multiple buyers or as a single buyer facing multiple sellers. In this paper, we review the state of the art of competition between auctions. We consider three different types of competition: competition between auctions, competition between formats, and competition between auctioneers vying for auction traffic. We highlight the newest experimental, statistical and analytical methods in the analysis of competition between auctions.auctions, bidding, competition, auction formats, auction houses

Multi-Unit Auctions to Allocate Water Scarcity Simulating Bidding Behaviour with Agent Based Models

Multi-unit auctions are promising mechanisms for the reallocation of water. The main advantage of such auctions is to avoid the lumpy bid issue. However, there is great uncertainty about the best auction formats when multi-unit auctions are used. The theory can only supply the structural properties of equilibrium strategies and the multiplicity of equilibria makes comparisons across auction formats difficult. Empirical studies and experiments have improved our knowledge of multi- unit auctions but they remain scarce and most experiments are restricted to two bidders and two units. Moreover, they demonstrate that bidders have limited rationality and learn through experience. This paper constructs an agent-based model of bidders to compare the performance of alternative auction formats under circumstances where bidders submit continuous bid supply functions and learn over time to adjust their bids to improve their net incomes. We demonstrate that under the generalized Vickrey, simulated bids converge towards truthful bids as predicted by the theory and that bid shading is the rule for the uniform and discriminatory auctions. Our study allows us to assess the potential gains from agent-based modelling approaches in the assessment of the dynamic performance of multi-unit procurement auctions. Some recommendations on the desirable format of water auctions are provided.Multi-unit auctions, Learning, Multi-agent models, Water allocation

The use of procedural fairness in electronic reverse auctions to enhance relationship quality

In this study, the use of procedural fairness by a buying organization in an electronic reverse auction (ERA) is examined. Drawing on the literature, a conceptual model is developed that relates procedural fairness to two key ERA outcomes: relationship quality and quality of the offering. The hypothesized relationships between procedural fairness and quality outcomes are empirically tested through a global field study with 179 procurement professionals in multinational companies, and explored through a supporting field study with 31 sales professionals from supplier firms. The results show that the use of procedural fairness by a buying organization is positively related to relationship quality and quality of the offering, without jeopardizing price savings. In addition, the positive association between procedural fairness and relationship quality is found to increase in the case of a repeat auction. This study contributes to the relationship marketing literature by examining how procedural fairness can mitigate relationship quality concerns in ERA use by buying organizations. (C) 2016 Wiley Periodicals, Inc

The Simple Economics of Hog Marketing Reforms in Quebec

Hogs, marketing, vertical coordination, auctions, Industrial Organization, Livestock Production/Industries, Marketing,

Which instruments to preserve forest biodiversity?

In general, neither the social norms nor market dynamics stimulate spontaneously activities and practices conducive to biodiversity. The nature of public good of biodiversity leads to its rapid erosion. Even if it can respond positively to social expectations and improve welfare in the long term2, taking into account biodiversity often leads to changes in the way we produce or how to exercise its property right. The consideration of biodiversity may determine production losses and income decreases.[...]

Competition Between Auctions

Even though auctions are capturing an increasing share of commerce, they are typically treated in the theoretical economics literature as isolated. That is, an auction is typically treated as a single seller facing multiple buyers or as a single buyer facing multiple sellers. In this paper, we review the state of the art of competition between auctions. We consider three different types of competition: competition between auctions, competition between formats, and competition between auctioneers vying for auction traffic. We highlight the newest experimental, statistical and analytical methods in the analysis of competition between auctions

What If? A Look at Integrity Pacts

This note examines the Integrity Pact (IP) methodology proposed by Transparency International to confront the problem of corruption in public procurement. The examination draws from a decision model for participants developed elsewhere, in which the critical elements are shown to be the vulnerability of the conditions under which the tender is conducted and the risk of bribing. The IP methodology intends to interfere with the central elements in individual tender instantiations by a process of discussion leading to mutual trust; participants and public officials sign a pledge of honesty. Disputes are to be resolved by private arbitration and allegedly enforcement is attained by force of a private contract between participants. Preferably, a civil society organization stimulates and monitors the process and acts as fiducial guarantor. Publicising proceedings stimulates discus-sion and enhances transparency. All this is held to favourably affect the process, leading to better results. This, in turn, is held to affect the overall environment over time. In order to accommodate for the ethical dimension introduced by IPs, the present analysis incorporates an “ethical” factor operating over the conditions under which tenders are conducted. Ascertaining the operation of this hypothetical factor is an empirical question. The examination of IP premises, together with evidence collected from instantiations of the meth-odology, plus the absence of comparative empirical data on bribery, leads to the conclusion that IPs do not heighten the risk of bribing for participants. Contrary to the methodology’s claim, en-forcement, be it from arbitration or otherwise, is shown to be dependent on each particular envi-ronment. Conditions under which particular tenders are conducted might be bettered, but not un-conditionally, as the institutional framework perforce dominates private agreements. The influence of the “ethical” factor cannot be assessed for lack of empirical evidence, and the honesty pledge IPs rely on is argued to be devoid of significance. Although for lack of data the economic effi-ciency of the methodology cannot be ascertained, there is no reason to suppose that IPs do not bet-ter the outcomes piecewise. The methodology fails to address the problem of cartelisation that af-fects public markets, and – perhaps due to the low frequency of its application – does not discuss measures to counterbalance the action of cartels. Interpreting the premises behind the IP idea, it is argued that they stem from a perspective on cor-ruption rooted on morality rather than on the mechanisms that propitiate bribery. Thus, tackling individual instantiations is favoured over confronting systemic factors. IP guidelines stipulate that the absence of allegations of bribery in a tender authorises the sponsor-ing NGO to announce that the tender was “clean”. It is argued that such manifestations of overcon-fidence are hazardous for the reputation of NGOs that adopt the methodology. It is also argued that the continuous involvement of NGOs with IPs raises questions about their entitlement to it, more-over because NGOs are not bound by oversight and accountability constraints that formally charac- terise State organisms. It is contended that for both governments and NGOs, promoting and par-ticipating in IPs is a strategic decision that should be balanced with their effectiveness towards the aim of changing the institutional environment.Control, corruption, integrity pact, public procurement, regulation, Transparency International