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

Abstract

This 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.