7
Base Model
Competitive intensity has a nuanced relationship with bid-
ding outcomes in natural resource industries. Some research
suggests increased competition leads to higher bidding.
Ceptureanu (2016) found that factors like market share
distribution, growth rate, and profitability—which indicate
competitive intensity—lead companies to intensify compe-
tition. Similarly, Sharma &Sud (2019) found that uncer-
tainties in India’s oil and gas regulatory framework were
exploited by companies, resulting in aggressive bidding.
Several papers provide some evidence that in com-
mon value auctions, where bidders have private informa-
tion about the value of the item, competitive intensity
impact bidding behavior and outcomes. Multiple papers
found that bidders shade their bids to account for the value
proposition and competition in common value auctions
(Hendricks &Porter, 2007 Compiani et al, 2020).
Based on these, we propose the following base model
presented in the Figure 1. The mathematical equation for
the model is shown as Equation (1). This model is applied
to coal block auctions in India, hence, the variables are
expressed for the same.
Bi =α0 +β1 Vi +β2 N +εi (1)
where, Bi is the bid amount and Excess Bid, in two version
of the relationship we intend to test, Vi is the value for a
mineral asset for the bidder and Ni is the degree of com-
petition intensity for the subject mineral asset. The Base
Model specifies that bid amounts are dependent variables
on the value of asset being auctioned and the competitive
intensity. The estimators of our interest are β1 and β2.
In this Base Model, the hypotheses that we propose are:
• H1: Common value of coal blocks influence the bid
amounts and excess bids that bidders offer to acquire
their mineral rights
• H2: Competitive intensity for coal block on offer
influence the bid amounts and excess bids that bid-
ders offer to acquire their mineral rights
Moderation Model
Competition appears to have a significant moderating
effect on bidding outcomes for natural resources, accord-
ing to several papers. When competition is intense, bid-
ders are more likely to overvalue resources to win auctions,
leading to the “winner’s curse” (Oren &Williams, 1975).
However, some other papers point to a contrary conclusion
-bidders bid less aggressively when they expect more com-
petition, demonstrating an awareness of the winner’s curse
(Hendricks, Porter &Tan, 2008). There are some papers
that also present mechanism of the information about level
of competition making bidders consider value of every
piece of information carefully. The value of information
in competitive bidding depends on the level of competi-
tion. When competition is weak, bidders can take fewer
observations to estimate a resource’s value (Chatterjee &
Harrison, 1988). However, as competition intensifies, the
value of information increases. Defenders will explore more
to make effective bids, while prospectors will exploit infor-
mation to make efficient bids (Auh &Menguc, 2005).
By modifying the relationship between the common
value of mines and bid amounts, an independent and a
dependent variable, competitive intensity, another inde-
pendent variable, manifests the characteristics of a moder-
ating variable (Atiningsih &Izzaty, 2021). Based on these,
we propose the following Moderator Model presented in
the Figure 2. The mathematical equation for the model is
shown as Equation (2). This model is applied to coal block
auctions in India, hence, the variables are expressed for
the same.
Bi =α0 +β1 Vi +β2 Ni +β3 (Vi Ni) +εi (2)
where, Bi is the bid amount and Excess Bid, in two ver-
sion of the relationship we intend to test, Vi is the value
for a mineral asset for the bidder and Ni is the degree of
competition intensity for the subject mineral asset. The
Moderator Model specifies that bid amounts are dependent
variables on the value of asset being auctioned and their
relationship with common value of mines gets modified by
Figure 1. Diagrammatic representation of base model Figure 2. Diagrammatic representation of moderator model
Base Model
Competitive intensity has a nuanced relationship with bid-
ding outcomes in natural resource industries. Some research
suggests increased competition leads to higher bidding.
Ceptureanu (2016) found that factors like market share
distribution, growth rate, and profitability—which indicate
competitive intensity—lead companies to intensify compe-
tition. Similarly, Sharma &Sud (2019) found that uncer-
tainties in India’s oil and gas regulatory framework were
exploited by companies, resulting in aggressive bidding.
Several papers provide some evidence that in com-
mon value auctions, where bidders have private informa-
tion about the value of the item, competitive intensity
impact bidding behavior and outcomes. Multiple papers
found that bidders shade their bids to account for the value
proposition and competition in common value auctions
(Hendricks &Porter, 2007 Compiani et al, 2020).
Based on these, we propose the following base model
presented in the Figure 1. The mathematical equation for
the model is shown as Equation (1). This model is applied
to coal block auctions in India, hence, the variables are
expressed for the same.
Bi =α0 +β1 Vi +β2 N +εi (1)
where, Bi is the bid amount and Excess Bid, in two version
of the relationship we intend to test, Vi is the value for a
mineral asset for the bidder and Ni is the degree of com-
petition intensity for the subject mineral asset. The Base
Model specifies that bid amounts are dependent variables
on the value of asset being auctioned and the competitive
intensity. The estimators of our interest are β1 and β2.
In this Base Model, the hypotheses that we propose are:
• H1: Common value of coal blocks influence the bid
amounts and excess bids that bidders offer to acquire
their mineral rights
• H2: Competitive intensity for coal block on offer
influence the bid amounts and excess bids that bid-
ders offer to acquire their mineral rights
Moderation Model
Competition appears to have a significant moderating
effect on bidding outcomes for natural resources, accord-
ing to several papers. When competition is intense, bid-
ders are more likely to overvalue resources to win auctions,
leading to the “winner’s curse” (Oren &Williams, 1975).
However, some other papers point to a contrary conclusion
-bidders bid less aggressively when they expect more com-
petition, demonstrating an awareness of the winner’s curse
(Hendricks, Porter &Tan, 2008). There are some papers
that also present mechanism of the information about level
of competition making bidders consider value of every
piece of information carefully. The value of information
in competitive bidding depends on the level of competi-
tion. When competition is weak, bidders can take fewer
observations to estimate a resource’s value (Chatterjee &
Harrison, 1988). However, as competition intensifies, the
value of information increases. Defenders will explore more
to make effective bids, while prospectors will exploit infor-
mation to make efficient bids (Auh &Menguc, 2005).
By modifying the relationship between the common
value of mines and bid amounts, an independent and a
dependent variable, competitive intensity, another inde-
pendent variable, manifests the characteristics of a moder-
ating variable (Atiningsih &Izzaty, 2021). Based on these,
we propose the following Moderator Model presented in
the Figure 2. The mathematical equation for the model is
shown as Equation (2). This model is applied to coal block
auctions in India, hence, the variables are expressed for
the same.
Bi =α0 +β1 Vi +β2 Ni +β3 (Vi Ni) +εi (2)
where, Bi is the bid amount and Excess Bid, in two ver-
sion of the relationship we intend to test, Vi is the value
for a mineral asset for the bidder and Ni is the degree of
competition intensity for the subject mineral asset. The
Moderator Model specifies that bid amounts are dependent
variables on the value of asset being auctioned and their
relationship with common value of mines gets modified by
Figure 1. Diagrammatic representation of base model Figure 2. Diagrammatic representation of moderator model