Auction versus direct sale: the effect of buyers and sellers on prices
Publication details
Journal : European Review of Agricultural Economics , vol. 50 , p. 84–114 , 2021
Publisher : Oxford University Press
International Standard Numbers
:
Printed
:
0165-1587
Electronic
:
1464-3618
Publication type : Academic article
Issue : 1
Links
:
ARKIV
:
hdl.handle.net/11250/2829977
DOI
:
doi.org/10.1093/erae/jbab051
Research areas
Economy and profitability
Market studies
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Kjetil Aune
Chief Librarian
kjetil.aune@nofima.no
Summary
This study examines the question of selling agricultural commodities by auction or directly. Hedonic price analysis using transaction data from the sale of frozen cod in Norway shows that buyer–seller matches explain 32.4 and 13.6 per cent of the price variation in direct sales and auctions, respectively, indicating that direct sales are more informationally efficient than auctions. Meanwhile, auctions gain a price premium of 2.6 per cent over direct sales, holding other variables constant. However, a substantial increase in the use of direct sales indicates that their information efficiency is more important to sellers than the small price premium provided by auctions.
