Estimating Auctions with Externalities: The Case of USFS Timber Auctions
46 Pages Posted: 28 Oct 2016
Date Written: June 16, 2016
This paper studies how bidding strategies and auction outcomes are affected by downstream competition, particularly for USFS timber auctions. This is done by extending the auction estimation literature to a model where outside competition affects bidding behavior in that bidders are then not only concerned with whether they win the auction, but also the identity of the winner if it is not them. Applying the estimation technique to the case of timber auctions, I find that downstream competition in the lumber industry affects the bidding behavior of mill bidders, sometimes leading to the misallocation of timber tracts.
Keywords: auction with externalities, auction estimation, timber auctions
JEL Classification: D44, L13, L40, L73
Suggested Citation: Suggested Citation