Simultaneous Allocation of Bundled Goods through Auctions: Assessing the Case for Joint Bidding

Abstract

Abstract:We study the costs and benefits of allowing joint bidding in multiple simultaneous first price sealed bid auctions for bundled goods with private values. Joint bidding raises the prospect of higher allocative efficiency but also reduces the number of bidders resulting in an ambiguous net impact on seller revenue. The research was carried out using laboratory experiments in which groups of up to six buyers competed for eight bundles of two separable goods each. The main results show that in our experimental environment, allowing joint bidding increases efficiency by 11.3% and revenue by 9.4%.The research has immediate applications to the sale of public forest stands that arbor a mixture of species. For this reason, we explore how the results are affected by excess supply, the presence of dominant firms, and the removal of an allocation rule requiring multiple bidders under certain circumstances.

Spatially coordinated conservation auctions: A framed field experiment focusing on farmland wildlife conservation in China

“…In the experiment, allowing neighboring farmers to communicate in Treatments SC_JB and SC_AB_JB (where joint bidding is allowed) would be better in line with reality: If an actual PES auction allows joint bidding, it would be difficult to imagine farmers bidding jointly without any communication or coordination because the formation of joint bids requires mutual agreement among joint bidding partners. If communication is allowed only for joint bidding but not for individual bidding, the treatment effects of joint bidding would be confounded by the effects of allowing communication (Rondeau et al, 2016). Therefore, we allowed communication in all four treatments.…”

“…More broadly, several other studies also investigated the performance of JB in PES auctions, such as Calel (2012), Iftekhar and Latacz-Lohmann (2017), and Iftekhar and Tisdell (2016), but these are simulation-based studies. Chernomaz (2012) and Rondeau et al (2016) conducted laboratory experiments on JB, but they did not concern PES and did not involve any spatial relations among bidders.…”

Timber selling policies using bundle-based auction: The case of public forests in Québec

“…While such joint-bidding might increase the allocative efficiency of the auction mechanism by allowing the allocation of each species of trees to a user who seeks it, it has some downsides. Indeed, by turning two individual bids into a single bid, joint bidding reduces competition and requires explicit agreements between bidders (Rondeau et al, 2016). Combinatorial auction, as considered in this paper, tend to resolve this kind of problems.…”

Farmers’ Preferences for Agri-Environmental Incentive Programs, Learning from Experiences in Ontario

“…Research on conservation auctions tested agglomeration bonuses (Parkhurst et al, 2002;Parkhurst & Shogren, 2007;etc. ), spatial-connection incentives (Banerjee et al, 2015;Fooks et al, 2016;Krawczyk et al, 2016;Liu et al, 2019;Windle et al, 2009); and joint bidding (Banerjee et al, 2021;Calel, 2012;Iftekhar & Tisdell, 2017;Rondeau et al, 2016;Smith & Day, 2018). Various research methods were used, including agent-based simulation models (Iftekhar & Tisdell, 2017); laboratory experiments (Banerjee et al, 2021;Krawczyk et al, 2016;Rondeau et al 2016); and framed field experiments (Liu et al, 2019 142 ).…”

“…), spatial-connection incentives (Banerjee et al, 2015;Fooks et al, 2016;Krawczyk et al, 2016;Liu et al, 2019;Windle et al, 2009); and joint bidding (Banerjee et al, 2021;Calel, 2012;Iftekhar & Tisdell, 2017;Rondeau et al, 2016;Smith & Day, 2018). Various research methods were used, including agent-based simulation models (Iftekhar & Tisdell, 2017); laboratory experiments (Banerjee et al, 2021;Krawczyk et al, 2016;Rondeau et al 2016); and framed field experiments (Liu et al, 2019 142 ). Opportunities for producers to submit joint bids in conservation auctions were also implemented on the ground in the "Auction for Landscape Recovery" in Australia Those papers testify of increasing recognition of the importance of coordination to reach ecological thresholds, in economic research, including by researchers promoting competitive approaches to PES as a solution to improve cost-efficiency.…”