Bidding for Cattle in the Texas Panhandle

15 Pages Posted: 21 Apr 2020

See all articles by John M. Crespi

John M. Crespi

Iowa State University

Richard J. Sexton

University of California, Davis - Department of Agricultural and Resource Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 2004

Abstract

Four beef‐processing plants in the Texas Panhandle region procure cattle from feedlots in a form of first‐price, sealed‐bid auction. These auctions have features that distinguish them from standard auctions. Using transactions‐level data, we estimated packer bid functions and, via simulations, compared the extant bidding environment to an alternative framework. The simulated auctions on average produced higher seller revenue, more frequent sales to the plant valuing the cattle most highly, and more switching by feedlots among competing packers. We attribute these results to packers' inconsistent bidding on the available lots of cattle and offer alternative explanations for this behavior.

Keywords: auction, beef packing, bidding, concentration, market allocation, oligopsony

Suggested Citation

Crespi, John M. and Sexton, Richard J., Bidding for Cattle in the Texas Panhandle (August 2004). American Journal of Agricultural Economics, Vol. 86, Issue 3, pp. 660-674, 2004, Available at SSRN: https://ssrn.com/abstract=3579583 or http://dx.doi.org/10.1111/j.0002-9092.2004.00609.x

John M. Crespi (Contact Author)

Iowa State University ( email )

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Richard J. Sexton

University of California, Davis - Department of Agricultural and Resource Economics ( email )

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