Reserve Prices and Bidder Participation in an English Auction: The Case of Atlantic Cod in Norway
Publication details
Journal : Marine Resource Economics , vol. 38 , p. 249–261 , 2023
International Standard Numbers
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Printed
:
0738-1360
Publication type : Academic article
Issue : 3
Links
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DOI
:
doi.org/10.1086/725003
Research areas
Economy and profitability
If you have questions about the publication, you may contact Nofima’s Chief Librarian.
Kjetil Aune
Chief Librarian
kjetil.aune@nofima.no
Summary
This study investigates the impact of reserve prices on bidder participation in the main Norwegian auction market for frozen Atlantic cod. Theoretically, there is a negative relationship between reserve prices and bidder participation. However, our empirical findings show that the reserve price actually has no negative influence on bidder participation. A simulation exercise taking buyers’ true valuations into account also shows a negligible effect of reserve prices on the probability of two or more participating bidders. Other factors are more important in attracting bidders to the auction. Most notably, cod caught by longline, which implies fish of high quality, enhances the probability of two or more bidders by 11.8%. Auctioneers should focus on information transparency regarding fish quality to attract participants and hence improve the efficiency of auction markets.
