Price Auction Research Articles

Supply chain low-carbon cooperation under the partially paid carbon allowances policy: a dynamic perspective

The transition from free towards partially paid carbon allowances allocation under the cap-and-trade is reshaping industrial practices. This study constructs a supply chain model involving a high-emission supplier and a manufacturer to analyse low-carbon performance and policy effectiveness from a dynamic perspective. To address production bottlenecks caused by carbon allowance constraints, we propose an innovative cooperative approach where surplus carbon allowances are transferred from the supplier to the manufacturer, along with joint investments in emission reduction. The necessary conditions for achieving such cooperation are explored. We find that despite potential disincentives for paid allowances, policymakers can stimulate emission reduction by tightening carbon allocation when the auction price is sufficiently high. When the supplier improves the emission reduction investment, surplus allowances are accumulated in scenarios of high market demand. However, in the later stages of the investment, these surplus allowances gradually decrease until exhausted due to the declining efficiency of the reduction technology over time. Based on the sustainable accumulation of surplus carbon allowances, successful cooperation also depends on unit profit latitude from low-carbon product sales and the maturity of emission reduction technology. Numerical examples provide a comprehensive analysis of the temporal and policy-related effects on supply chain performance.

Reserve prices in second-price auctions with asymmetric bidders

Reserve prices in second-price auctions with asymmetric bidders

Impulse response of auction price by practicing auction scheme for solar PV generation to generation quantity, investment and Brent crude oil price

Energy is crucial for economic progress worldwide, regardless of a country’s development status. However, the negative impacts of traditional energy sources have prompted global policymakers to reconsider fossil fuel consumption patterns. In addition to these harmful effects, regional conflicts such as the Russia-Ukraine war and tensions involving Israel, Palestine, and Iran are contributing to instability in the global energy market, which in turn affects general market stability. Consequently, global leaders are focusing on country-specific energy policies that prioritize the transition to renewable energy sources in future energy strategies. To ensure the widespread and cost-effective use of solar photovoltaic energy, many countries, including those in the European Union and beyond, are increasingly utilizing renewable energy auction techniques. Thus, the primary focus of this study is to evaluate the impact of a competitive auction technique on the expansion of solar PV generation and the potential reduction (or stabilization) of Brent crude oil prices (i.e., West Texas intermediate oil price). This is particularly relevant given the shifting investment trends in the renewable energy sector, with a specific emphasis on seven open and dynamic economies within the EU. To conduct this analysis, the authors employed a panel vector autoregression (VAR) model, utilizing annual data spanning from 2000 to 2021. The result indicates that the competitive auction value for solar PV accelerates the generation of solar PV in the selected EU countries and the countries are likely to decrease their reliance on fossil fuel-based sources for electricity generation. Because, the auction price is becoming competitive to the Brent crude oil price. Further, the investment in the solar PV sector is not sufficient yet.

Regret Minimization and Separation in Multi-Bidder, Multi-Item Auctions

We study a robust auction design problem with a minimax regret objective, in which a seller seeks a mechanism for selling multiple items to multiple bidders with additive values. The seller knows that the bidders’ values range over a box uncertainty set but has no information on their probability distribution. The robust auction design model we study requires no distributional information except for upper bounds on the bidders’ values for each item. This model is relevant if there is no trustworthy distributional information or if any distributional information is costly or time-consuming to acquire. We propose a mechanism that sells each item separately via a second price auction with a random reserve price and prove that this mechanism is optimal using duality techniques from robust optimization. We then interpret the auction design problem as a zero-sum game between the seller, who chooses a mechanism, and a fictitious adversary or “nature,” who chooses the bidders’ values from within the uncertainty set with the aim to maximize the seller’s regret. We characterize the Nash equilibrium of this game analytically when the bidders are symmetric. The Nash strategy of the seller coincides with the optimal separable second price auction, whereas the Nash strategy of nature is mixed and constitutes a probability distribution on the uncertainty set under which each bidder’s values for the items are comonotonic. We also study a restricted auction design problem over deterministic mechanisms. In this setting, we characterize the suboptimality of a separable second price auction with deterministic reserve prices and show that this auction becomes optimal if the bidders are symmetric. The optimal mechanism is derived in closed form and can easily be implemented by practitioners. History: Accepted by Andrea Lodi, Area Editor for Design & Analysis of Algorithms–Discrete. Funding: This research was funded by the Swiss National Science Foundation [Grant BSCGI0_157733] and by the Ministry of Education, Singapore, under its Academic Research Fund Tier 2 [Grant MOE-T2EP20222-0003]. Supplemental Material: The software that supports the findings of this study is available within the paper and its Supplemental Information ( https://pubsonline.informs.org/doi/suppl/10.1287/ijoc.2022.0275 ) as well as from the IJOC GitHub software repository ( https://github.com/INFORMSJoC/2022.0275 ). The complete IJOC Software and Data Repository is available at https://informsjoc.github.io/ .

What keeps the market ticking? The role of third‐party audiences and cognitive embeddedness in shaping competitive dynamics in luxury watchmaking

AbstractResearch SummaryCompetitive dynamics between firms and buyers are shaped by mutually understood conceptual systems that enable market interactions. Third‐party audiences, such as the media, play a crucial role in shaping market structure and evolution by facilitating the development of these conceptual systems. Although they do not directly engage in contractual bargaining, third‐party audiences stabilize perceptions and facilitate market interactions by cognitively embedding competitive dynamics. Our study examines the coreness of firms within the semantic network of firm names as relayed by the media. We find that higher coreness positively impacts auction prices. This effect is moderated by firm visibility and the tone of media coverage. Our model is tested using a unique dataset from the luxury watchmaking industry.Managerial SummaryWe demonstrate that a firm's performance is shaped not only by how prominently or positively it is featured in the media, but also by the relational context in which it is mentioned. Firms that are frequently mentioned alongside other key industry players are perceived to be the core of the industry, leading to higher auction prices for their products. The effect is strengthened when a firm enjoys frequent and positive media coverage. For managers, our findings underscore the importance of understanding how and why the media associates their brand with others, as this can enhance its value in secondary markets, and thus potentially boost value capture in primary markets. Our analysis explores the luxury watchmaking industry, a setting that is rarely studied.

How Do “One-Time Bidding, Average Price Win” Land Auction Rules Affect Land Prices: A Quasinatural Experiment in Suzhou, China

The land price reflects the supply and demand relationship in the land market and plays an important role in regulating land use. Improving land auction rules is of great significance for avoiding abnormal fluctuations in the land market and promoting the sustainable use of land resources. To regulate the abnormal fluctuations in the state-owned land use rights’ auction prices, Chinese local governments have implemented a “sealed one-time bidding, average price wins” rule. However, limited theoretical and empirical research that assesses its policy impact exists. This study examines the policy motivations behind this rule, constructing three game models; namely, static complete information, static incomplete information, and multiperiod repeated games. By deducing bidding strategies and equilibrium results, hypotheses are formulated. A baseline difference-in-differences (DID) and a dynamic policy effect model are designed, and the Python crawler is used to obtain 1182 microland auction samples in Suzhou. This study evaluates the impact of the one-time bidding rule on the starting prices, transaction prices, and premium rates. The empirical results underwent multiple robustness tests, eliminating potential endogeneity issues and biases. The results show that while the policy is effective in restraining the premium rate, indicating the bidding intensity in single-land auctions, it proves challenging to curb the long-term rise in land prices through continuous bidding auctions. Moreover, the policy may stimulate local governments to increase auction starting prices.

Market segments and pricing of fine wines over their lifecycle

Is the fine wine market segmented? The literature shows that this is the case for ordinary wines, and this has significant implications for hedonic analysis. We apply a finite mixture model to a 20-year dataset of auction prices. Our results reveal the existence of five segments in the fine wine market that differ in both their composition and the effects of scores, age, and market conditions on prices. This segmentation helps reconcile the divergent findings in existing research: some wines are highly sensitive to market conditions and have yielded significant returns (investment wines), while prices of other wines are primarily influenced by age (collectible wines) or quality (drinking wines). Our findings enhance the understanding of fine wine pricing and offer new insights into the age-price relationship, which is generally linear but varies by segment and vintage quality.

Bidding behaviour in experimental auctions under risk and uncertainty

AbstractThis paper explores bidding behaviour under risk and uncertainty using the Becker-DeGroot-Marschak mechanism (BDM) and second price auction (SPA). It investigates whether values elicited via the two mechanisms are consistent and whether bidding behaviour can be influenced by differences in the number and type of sources of risk and uncertainty that people face when exposed to the two mechanisms. In our experiment, subjects are exposed to non-monetary lotteries where they bid for a high-quality seafood product, but there is a chance (known or unknown) that they receive a lower quality seafood product instead. Results indicate that bidding behaviour can be influenced by the number and type of sources of risk and uncertainty that subjects face and subjects’ bidding behaviour is only consistent with standard theories of decision making under risk and uncertainty when they bid on a risky product in the SPA. Despite this, BDM and SPA elicit equal values under risk and uncertainty in this study.

The Death of the Author: The Case of art Market

Recent evidence suggests that the artwork of an experienced artist is usually more expensive than that of a beginner. Additionally, the artwork of a man is often more expensive than that of a woman, and a painting is typically more expensive than graphics. However, this research aims to contrast the influence of the author's age and sex on the price with the influence of the artwork's material and technique. This idea is based on Roland Barthes’ famous philosophical doctrine about the death of the author, which appeared in 1968 and remains relevant today. In our article, this doctrine is tested for the art market. The research question posed is whether the author's influence dies in relation to their artwork after its creation or whether the artwork begins to live its own life without the author. To answer this question, a study was conducted comparing the impact on auction prices of the artist's biography and the characteristics of the artwork. The artist's biography inevitably determines their creativity and affects their art, while the characteristics of the artwork are not directly related to the personality of the author but are important from a consumption standpoint. Several dozen features were identified and divided into author and artwork characteristics. For author characteristics, demographic features such as sex and nationality were used, as well as biographical features such as education and migration. Artwork characteristics included size, material, technique, provenance, author's signature and frame, mentions in scientific literature, etc. By applying hedonic regression on a unique collected dataset of more than 15,000 artworks by the most expensive authors sold at world-famous auction houses such as Sotheby's and Christie's, it was determined which characteristics have the greatest influence on price and which specific features are most important.

Impact of different CO2 price paths on the development of the European electricity system

In energy system transformation studies, the assumption of linearly rising CO2 prices is common and based on the decreasing issued European allowances (EUA). The actual auction price for allowances is influenced by market dynamics, resulting in non-linear variations in CO2 prices due to the possibility of banking allowances. This study explores the impact of non-linear CO2 price trajectories on the European electricity market. Various scenarios, such as increasing prices with the market interest rate, early price peaks, collapse, or fluctuations, are examined until 2030. The study quantifies the effects on power plant investments, profitability, consumer costs, and government revenues. The findings reveal that early and high price signals lead to an earlier transition with 7 % more wind power plants but at 4 % higher costs. Conversely, lower initial prices delay power plant investments in wind power plants by 6 % and result in 21 % higher emissions. Compensation for climate impact costs can yield a positive cost-benefit analysis in scenarios with early and high price signals when emissions are avoided through mechanisms like the Market Stability Reserve (MSR).

Evaluating the Privacy Valuation of Personal Data on Smartphones

Smartphones hold a great variety of personal data during usage, which at the same time poses privacy risks. In this paper, we used the selling price to reflect users' privacy valuation of their personal data on smartphones. In a 7-day auction, they sold their data as commodities and earn money. We first designed a total of 49 commodities with 8 attributes, covering 14 common types of personal data on smartphones. Then, through a large-scale reverse second price auction (N=181), we examined students' valuation of 15 representative commodities. The average bid-price was 62.8 CNY (8.68 USD) and a regression model with 14 independent variables found the most influential factors for bid-price to be privacy risk, ethnic and gender. When validating our results on non-students (N=34), we found that despite they gave significantly higher prices (M=109.8 CNY, 15.17 USD), "privacy risk" was still one of the most influential factors among the 17 independent variables in the regression model. We recommended that stakeholders should provide 8 attributes of data when selling or managing it.

INVESTIGATION OF BUSINESS AND CULTURE-ART TOURISM DEMAND SOURCED FROM INTERNATIONAL AUCTION HOUSES

This study aims to investigate the impact of auction houses on the demand for business and cultural tourism, influencing travel experiences and shaping tourist expenditures. Using a decade of data and field observations, in-depth interviews were conducted with auction house stakeholders to explore the gap between starting and final selling prices and the tourist flow at these establishments. Tourist numbers were determined through “Office for National Statistics” data, and auction data were analysed using product catalogues and bid prices. Descriptive statistics and regression analysis were employed to examine the relationship between tourist numbers and auction prices. The findings revealed no significant correlation between the selling prices of Islamic artefacts and tourist numbers; however, a robust connection was observed between auction prices and final selling prices. It is recommended to further analyse additional factors affecting tourist numbers. In light of these results, strategies emphasizing cultural and historical value are proposed for auction houses to enhance their tourist appeal, including the use of digital marketing and a reassessment of pricing strategies. This research underscores the need for a deeper understanding of the intricate relationship between auction houses and the tourism industry, emphasizing the necessity for further studies to make progress in comprehending and developing more effective strategies within a concise framework.

An Examination of Human Fast and Frugal Heuristic Decisions for Truckload Spot Pricing

Background: One of several logistics contexts in which pricing decisions are made involves truckload carriers using reverse auctions to bid for prices they want for their transportation services while operating under uncertainty about factors such as their (i) operations costs and (ii) rivals’ bids. This study’s main purpose is to explore humans’ use of fast and frugal heuristics (FFHs) to navigate those uncertainties. In particular, the study clarifies the logic, theoretical underpinnings, and performance of human FFHs. Methods: The study uses behavior experiments as its core research method. Results: The study’s key findings are that humans use rational FFHs, yet, despite the rationality, human decisions yield average profits that are 35% below profits from price optimization models. The study also found that human FFHs yield very unstable outcomes: the FFH coefficient of variation in profit is twice as large as price optimization. Novel contributions inherent in these findings include (a) clarifying connections between spot market auction pricing and behavioral theories and (b) adding truckload spot markets to the literature’s contexts for measuring performance gaps between human FFHs and optimization models. Conclusions: The contributions have implications for practical purposes that include gauging spot pricing decisions made under constraints such as limited access to price optimization tools.

Correlation analysis of primal cuts weight, fat contents, and auction prices in Landrace × Yorkshire × Duroc pig carcasses by VCS2000.

Currently, in pork auctions in Korea, only carcass weight and backfat thickness provide information on meat quantity, while the production volume of primal cuts and fat contents remains largely unknown. This study aims to predict the production of primal cuts in pigs and investigate how these carcass traits affect pricing. Using the VCS2000, the production of shoulder blade, loin, belly, shoulder picnic, and ham was measured for gilts (17,257 pigs) and barrows (16,365 pigs) of LYD (Landrace × Yorkshire × Duroc) pigs. Single and multiple regression analysis were conducted to analyze the relationship between the primal cuts and carcass weight. The study also examined the correlation between each primal cut, backfat thickness (1st thoracic vertebra backfat thickness, grading backfat thickness, and Multi-brached muscle middle backfat thickness), pork belly fat percentage, total fat yield, and auction price. A multiple regression analysis was conducted between the carcass traits that showed a high correlation and the auction price. After conducting a single regression analysis on the primal cuts of gilt and barrow, all coefficients of determination (R2) were 0.77 or higher. In the multiple regression analysis, the R2 value was 0.98 or higher. The correlation coefficient between the carcass weights and the auction price exceeded 0.70, while the correlation coefficients between the primal cuts and the auction prices were above 0.65. In terms of fat content, the backfat thickness of gilt exhibited a correlation coefficient of 0.70, and all other items had a correlation coefficient of 0.47 or higher. The correlation coefficients between the Forequarter, Middle, and Hindquarter and the auction price were 0.62 or higher. The R2 values of the multiple regression analysis between carcass traits and auction price were 0.5 or higher for gilts and 0.4 or higher for barrows. The regression equations between carcass weight and primal cuts derived in this study exhibited high determination coefficients, suggesting that they could serve as reliable means to predict primal cut production from pig carcasses. Elucidating the correlation between primal cuts, fat contents and auction prices can provide economic indicators for pork and assist in guiding the direction of pig farming.

Starting high or low in English auctions? The case of frozen saithe in Norway

AbstractThis study investigates the role of starting prices in sequentially ascending (English) auctions. Applying binary logit and hedonic price models on a unique data set comprising 8217 auctioned lots of frozen saithe, an important species in Norwegian fisheries, we find support for three hypotheses; that low starting prices will lead to a higher share of successful auctions, a higher number of participating bidders, and higher final prices. These results indicate that starting prices in English auctions are important for both seller revenue and auction efficiency and are important with respect to strategic behavior in auction markets for food commodities.

Convexity in Real-time Bidding and Related Problems

We study problems arising in real-time auction markets, common in e-commerce and computational advertising, where bidders face the problem of calculating optimal bids. We focus upon a contract management problem where a demand aggregator is subject to multiple contractual obligations requiring them to acquire items of heterogeneous types at a specified rate and where they will seek to fulfill these obligations at minimum cost. Our main results show that, through a transformation of variables, this problem can be formulated as a convex optimization problem, for both first and second price auctions. The resulting duality theory admits rich structure and interpretations. Additionally, we show that the transformation of variables can be used to guarantee the convexity of optimal bidding problems studied by other authors, who did not leverage convexity in their analysis. The main point of our work is to emphasize that the natural convexity properties arising in first and second price auctions are not being fully exploited. Finally, we show direct analogies to problems in financial markets: the expected cost of bidding in second price auctions is formally identical to certain transaction costs when submitting market orders, and that a related conjugate function arises in dark pool financial markets.

Procurement with a strong insider

We consider a procurement auction with a “strong” insider and N outside bidders. Within the confines of uniformly distributed independent private values, we compare a standard second price auction with a “tournament” in which the outsiders bid first to win the right to compete with the insider. The bids of the outsiders are binding and the highest bidder proceeds to a second-price competition with the insider. We take the insider to be “sufficiently strong” relative to the insiders.The outsiders bid above their values and the expected revenue exceeds that of the standard second price auction. This is true for any finite N, and in the limit as N grows large.

Implementation of Land Auctions as Guarantee for Debt Repayment

Execution is the creditor's ultimate step. If the debtor fails to comply with the conditions of Law No.4 of 1996 respecting Mortgage Rights over Land and Related Objects, an auction or execution may be held. The fundamental challenge in this study is how to conduct an auction of mortgage rights on property as collateral for debt repayment. What are the hurdles to auctioning mortgage rights on land as collateral for debt repayment? This research is classed under Survey or Empirical Law. Meanwhile, the character of this study is descriptive. The research focuses on auction implementation at Bank BPR Wonogiri and BKK Wonogiri. The results of this research is that the auction process carried out by Bank BPR Wonogiri, if the debtor is in default, is carried out at a public auction through the State Property and Auction Service Office or by selling privately. Auctioning mortgage rights is a bit hampered because in the current situation it is difficult to find buyers and auctions are lacking. The findings of this study indicate that if a debtor is in default, Bank BPR Wonogiri conducts a public auction through the State Property and Auction Service Office or sells privately. Auctioning mortgage rights is complicated by the existing difficulty in finding purchasers and the scarcity of auctions. The obstacles faced were that when executing the promise, it did not work effectively, there was a third lawsuit, the binding of the mortgage was not carried out perfectly, interference from third parties during the execution and disagreements regarding the auction price between the debtor and the auction official.

Determinants of Thoroughbred yearling sales price in the UK

AbstractBackgroundIndustry‐level figures suggest that up to two‐thirds of Thoroughbred breeding operations in the UK are unprofitable and that around half of sales transactions of Thoroughbred yearlings, commercial breeders’ predominant income source, return a loss. The industry strategy currently endorses investment in stallion covering fee; however, to date, a comprehensive evaluation of sales price determinants in the UK setting is lacking and could better inform economic decision making to improve profitability.MethodsSales catalogue and Weatherbys’ stud book data from all Thoroughbred yearlings sold at the 2020 Tattersalls October yearling sale in the UK were used to build a hedonic sales price model. Explanatory variables representing sire, dam, yearling and sales attributes were evaluated. The final model's accuracy was assessed using out‐of‐sample data from all yearlings sold in the equivalent 2021 sale.ResultsIn 2020, a total of 1506 catalogued yearlings, representing around 30% of the UK Thoroughbred foal crop, were sold, with a median price of £42,575 (interquartile range 15,750‒105,000; range 840‒3,570,000). The sires’ covering fee, maternal siblings’ race performance attributes, whether the yearling was the dams’ first foal, consignment size, catalogue book and day of sale within book significantly influenced auction price; however, relationships were complex with significant interaction and confounding observed. The mean model forecasting error was £2074. The use of data from only one sale could affect generalisability.ConclusionsThese novel findings can inform breeding decisions to maximise profitability, give context for current industry strategies and can inform valuations of breeding stock.

Treatment Comparison for Medial Femoral Condyle Subchondral Cystic Lesions and Prognosis in Yearling Thoroughbred Racehorse Prospects.

Subchondral cystic lesions (SCL) in the medial femoral condyle are a usual finding in Thoroughbred survey and auction repository radiographs. Several treatments with different outcomes have been studied over the years to improve soundness and racing prognosis. Our objective was to report the racing prognosis in Thoroughbred yearlings intended for racing that were diagnosed with SCL in the medial femoral condyle and were treated using four current and different techniques: intralesional injection of corticosteroids, SCL debridement through the joint with a drill bit, translesional cortical screw placement, and absorbable hydroxyapatite implant placement. Data from 182 Thoroughbred yearlings treated for SCL in the medial femoral condyle were collected from 2014 to 2020. Limb affected, age at surgery, sex, and radiographic measurements of the SCL were recorded. Auction price and racing performance were collected for treated horses and compared to 154 maternal siblings free of medial femoral condyle SCL. Analyses were conducted to assess if racing prognosis was affected by SCL size, to detect differences in auction price and selected flat racing outcome parameters between cases and controls, and to compare racing prognosis between the studied treatments. Mares and lesions located in the right stifle were significantly overrepresented. The auction price of treated horses was significantly lower than that of their siblings. Horses treated for SCL had significantly lower chances to start in a race than controls (59% vs. 74% respectively). Wider SCL negatively affected the chances to start at least in one race, and negatively affected the earnings made in the 2-year-olds' racing year. Horses with SCL treated using a bioabsorbable implant had a significantly higher median in starts as 3-year-olds (seven starts) than horses that had the SCL debrided with a drill bit (three starts). In conclusion, Thoroughbred yearlings treated for a medial femoral condyle SCL had lower auction prices and decreased ability to start a race compared to siblings' wider cysts had worse prognosis to start a race and might affect earnings as 2-year-olds; and horses treated with bioabsorbable composite implant placement had more starts as 3-year-olds than with other techniques.