Interregional Price Difference in the New Orleans Auctions Market for Slaves

Abstract

Our article investigates the variation of winning bids in slave auctions held in New Orleans from 1804 to 1862. Specifically, we measure the variation in the price of slaves conditional on their geographical origin. Previous work using a regression framework ignored the auction mechanism used to sell slaves. This introduced a bias in the conditional mean of the winning bid because it depended on the number of bidders participating in the auction. Unfortunately, the number of bidders is unobserved by the econometrician.We adopt the standard framework of a symmetric independent private value auction and propose an estimation strategy to attempt to deal with this omitted variable bias. Our estimate of the mean number of bidders doubled from 1804 to 1862. We find the number of bidders had a significant positive effect on the average winning bid. An increase from 20 to 30 bidders in an auction raised the average winning bid by around 10%%. The price variation according to the geographical origin of slaves found in earlier work continues to persist after accounting for the omitted variable. We also find a new result that a considerable premium is paid for slaves originating from New Orleans. However, this price variation disappears once we account for regional productivity differences.