A Multinomial Logit Framework to Estimate Bid Shading in Procurement Auctions: Application to Cattle Sales in the Texas Panhandle

A Multinomial Logit Framework to Estimate Bid Shading in Procurement Auctions: Application to... We develop an empirical methodology based upon multinomial probability models to estimate the magnitude of bid shading in cattle procurement in the Texas Panhandle region. The methodology works well in settings where data allow a good estimation of a bidder’s probability of winning, but the approach does not rely upon the bidding process following any particular structural framework or on the existence of a control group. Estimated markdowns of price from the competitive level are in the range of 5–10% and are somewhat larger than estimates of oligopsony markdowns from previous studies of cattle procurement in the U.S. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

A Multinomial Logit Framework to Estimate Bid Shading in Procurement Auctions: Application to Cattle Sales in the Texas Panhandle

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Publisher
Springer Journals
Copyright
Copyright © 2005 by Springer
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-005-1755-5
Publisher site
See Article on Publisher Site

Abstract

We develop an empirical methodology based upon multinomial probability models to estimate the magnitude of bid shading in cattle procurement in the Texas Panhandle region. The methodology works well in settings where data allow a good estimation of a bidder’s probability of winning, but the approach does not rely upon the bidding process following any particular structural framework or on the existence of a control group. Estimated markdowns of price from the competitive level are in the range of 5–10% and are somewhat larger than estimates of oligopsony markdowns from previous studies of cattle procurement in the U.S.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Aug 8, 2005

References

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