Kalyn T. Coatney

Auction prices, market share, and a common agent

The primary pro-competitive justification for multiple principals to hire a common bidding agent is efficiency. The efficiency gained by doing so increases the advantage of the common bidding agent. Almost common value auction theory predicts that an advantaged bidder is able to reduce competition by credibly enhancing the ‘winner’s curse’ of disadvantaged rivals. The credible threat results in disadvantaged rivals exiting the bidding process early, leaving the advantaged bidder to purchase most, if not all, units at lower prices than when rivals have common values. The results of our empirical study of a common bidding agent are consistent with this theory.

Examining unconditional preference revelation in choice experiments: a voting game approach

If respondents are strategic, voting in choice experiments may violate the common modelling assumption that everyone votes for his unconditionally most-preferred alternative. This presents a challenge to accurately estimating welfare measures. We conduct a homegrown-value laboratory experiment designed to mimic a three-alternative choice experiment. Two key pieces of information not previously collected from participants are their (1) unconditionally most-preferred alternative and (2) their perception of the likely vote distribution. We are able to identify whether participants adopt a strategy of voting for their second-most-preferred alternative when their most-preferred alternative is believed likely to garner the fewest votes. We find that many more participants do not vote for their most-preferred alternative than theory predicts. We also test whether prompting participants to think about the likely vote distribution before voting affects their own vote. We find that prompting participants does not affect strategic voting. We find percentages of participants who do not vote for their most-preferred alternative, who cast strategic votes for their second most-preferred alternative, and who cast apparently ‘irrational’ votes are close to estimates from studies in political election settings. The presence of strategic and irrational votes should cause choice experiment researchers to rethink their model assumptions.

Willingness-to-pay for value-added freshwater prawns

ABSTRACT This article utilizes sensory analysis and auction experimental design to examine consumer willingness-to-pay for value-added freshwater prawns relative to the standard freshwater prawn. Although the combination of these two techniques has been previously applied to other food products, this is the first time that prawns have been the focus of such a study. Consumer willingness-to-pay was found to be significantly enhanced by two alternative salt processes, salt acclimation and marination. Results also show that salt acclimation had a stronger effect than marination on consumer bids, with flavor being the most significant sensory attribute.

Impacts of a Capacity Advantaged Bidder in Sequential Common Value Auctions: Evidence from the Laboratory

As bidders reach capacity throughout a sequential common value auction, theory predicts they will account for the option value of purchasing later units against fewer rivals. Mergers, joint purchasing arrangements, or a common bidding agent may result in a capacity advantaged bidder. Using laboratory experiments, we find that bidders account for the option value of winning later units when capacity constraints are significantly binding. Similar to the predictions of value advantaged bidder theory, the capacity advantaged bidder bids more aggressively, purchasing more units at lower prices than disadvantaged rivals. However, the creation of a capacity advantaged bidder transfers surplus to all bidders primarily due to the reduction in the number of bidders.

Coerced Reciprocal Dealing and the Leverage Theory

Recent international mergers have potentially revived interest in a long-standing concern of U.S. courts that, under certain conditions, a conglomerate that buys from and sells products to its intermediary supplier may be able to profitably leverage its downstream market power to restrict competition in the upstream market and harm welfare via coerced reciprocal dealing. Economists have debated the court precedent, invoking the leverage theory established from various models of tying arrangements, a cousin of coerced reciprocal dealing. We develop the first explicit model of coerced reciprocal dealings to investigate the validity of the leverage theory. Our results support the concerns.