14
total effect. This also confirms the results from the Base
Model wherein we observe that Value variable has no statis-
tically significant effect on Excess Bid.
DISCUSSION
The results of our research corroborate findings from other
studies of auctions of assets that have common value and
private value components. Based on the collected papers,
there is evidence to support the idea that competitive inten-
sity leads to an increase in bidding outcomes in auctions
with common value and private value components. Cox,
Dinkin &Smith (1999) found that more bidders entering
the auction leads to higher efficiency and seller’s revenues.
Hungria-Gunnelin (2018) observed that competitive inten-
sity in apartment sales auctions resulted in increased bid-
ding outcomes. Similarly, Hong, Wang &Pavlou (2016)
found that increased competition in online labor auctions
led to higher bidding outcomes. These findings suggest that
competitive intensity plays a significant role in influencing
bidding outcomes in auctions with both common and pri-
vate value components. There are studies that point to exis-
tence of winner’s curse as an indication of higher bidding
outcomes when competitive intensity is high. Cohn, Fehr
&Göette (2015) suggests that loss-averse bidders may bid
more aggressively in auctions with interdependent values,
potentially falling prey to the winner’s curse. This indicates
that higher competitive intensity can lead to higher bidding
outcomes. Giliberto &Varaiya (1989) explores the winner’s
curse and bidder competition in acquisitions and examines
bidding behavior in various auction markets and interprets
some of the results as supporting the winner’s curse hypoth-
esis. This suggests that higher competitive intensity can lead
to higher bidding outcomes.
Our study explores the mechanism of the influence
competition and common values have on the bidding out-
comes. The results of our study do not provide support for
the theory that common value may lead to attracting more
bidders and thus having a direct and an indirect effect on
bidding outcomes, thereby providing no evidence of medi-
ating effect of competitive intensity on bidding outcomes.
Results also indicate to lack of evidence of moderating
effect of competitive intensity on bidding outcomes in coal
block auctions in India. These are our contribution to the
literature.
LIMITATIONS OF THE STUDY AND
SCOPE OF FURTHER RESEARCH
As with any common value auction, we have no access to
the private information that affects the value function of
bidders. We have used the 8-public information items to
construct our Value variable that does not reflect the pri-
vate information of the bidders such as those whose power
generation plants or cement manufacturing plants may be
on the pithead and, therefore, may have higher values for
those coal blocks for which they have locational advantage.
While information about bidders’ end use plants may not
be impossible to find, I may still be a challenge to construct
a value function for such bidders. However, we believe that
a qualitative research with a few select participants may add
new insights to assessment of coal block auctions.
Our study considers the number of bidders to reflect
competitive intensity, which has its limitations. Not all bid-
ders are the same and not all of them have similar value
functions. The quality of competition may be an important
value addition to the definition of competitive intensity.
Identification of bidders as commercial miners and captive
consumers, along with the locations of their usage plants,
may help improve our understanding of degree of competi-
tive intensity and, thus, improve our understanding of out-
comes of auctions.
CONCLUSION
The results of our research provide insights on the effects
and relationships of Value and Competitive Intensity on
and with Bid amounts and Excess Bids. From the tests of
Base Model, when we consider Bid amount as the outcome
variable of coal block auctions, it is observed that both Value
and Competitive Intensity have statistically significant
effect. This is aligned with economic literature that value
of coal blocks on offer along with degree of competition
for them influence the outcome in terms of amounts bid to
acquire their mineral rights. We fail to reject hypotheses 1
Table 6. Results of tests for Mediator Model
Dependent Variable →
Bid Amount Excess Bid
Estimate p-value Estimate p-value
Direct Effect 916.46 0.000‡ 49.24 0.851
Indirect Effect 29.96 0.611 27.75 0.511
Total Effect 946.42 0.001‡ 76.99 0.788
Number of observation =127
*p 0.10, † p 0.05, ‡ p 0.01.
total effect. This also confirms the results from the Base
Model wherein we observe that Value variable has no statis-
tically significant effect on Excess Bid.
DISCUSSION
The results of our research corroborate findings from other
studies of auctions of assets that have common value and
private value components. Based on the collected papers,
there is evidence to support the idea that competitive inten-
sity leads to an increase in bidding outcomes in auctions
with common value and private value components. Cox,
Dinkin &Smith (1999) found that more bidders entering
the auction leads to higher efficiency and seller’s revenues.
Hungria-Gunnelin (2018) observed that competitive inten-
sity in apartment sales auctions resulted in increased bid-
ding outcomes. Similarly, Hong, Wang &Pavlou (2016)
found that increased competition in online labor auctions
led to higher bidding outcomes. These findings suggest that
competitive intensity plays a significant role in influencing
bidding outcomes in auctions with both common and pri-
vate value components. There are studies that point to exis-
tence of winner’s curse as an indication of higher bidding
outcomes when competitive intensity is high. Cohn, Fehr
&Göette (2015) suggests that loss-averse bidders may bid
more aggressively in auctions with interdependent values,
potentially falling prey to the winner’s curse. This indicates
that higher competitive intensity can lead to higher bidding
outcomes. Giliberto &Varaiya (1989) explores the winner’s
curse and bidder competition in acquisitions and examines
bidding behavior in various auction markets and interprets
some of the results as supporting the winner’s curse hypoth-
esis. This suggests that higher competitive intensity can lead
to higher bidding outcomes.
Our study explores the mechanism of the influence
competition and common values have on the bidding out-
comes. The results of our study do not provide support for
the theory that common value may lead to attracting more
bidders and thus having a direct and an indirect effect on
bidding outcomes, thereby providing no evidence of medi-
ating effect of competitive intensity on bidding outcomes.
Results also indicate to lack of evidence of moderating
effect of competitive intensity on bidding outcomes in coal
block auctions in India. These are our contribution to the
literature.
LIMITATIONS OF THE STUDY AND
SCOPE OF FURTHER RESEARCH
As with any common value auction, we have no access to
the private information that affects the value function of
bidders. We have used the 8-public information items to
construct our Value variable that does not reflect the pri-
vate information of the bidders such as those whose power
generation plants or cement manufacturing plants may be
on the pithead and, therefore, may have higher values for
those coal blocks for which they have locational advantage.
While information about bidders’ end use plants may not
be impossible to find, I may still be a challenge to construct
a value function for such bidders. However, we believe that
a qualitative research with a few select participants may add
new insights to assessment of coal block auctions.
Our study considers the number of bidders to reflect
competitive intensity, which has its limitations. Not all bid-
ders are the same and not all of them have similar value
functions. The quality of competition may be an important
value addition to the definition of competitive intensity.
Identification of bidders as commercial miners and captive
consumers, along with the locations of their usage plants,
may help improve our understanding of degree of competi-
tive intensity and, thus, improve our understanding of out-
comes of auctions.
CONCLUSION
The results of our research provide insights on the effects
and relationships of Value and Competitive Intensity on
and with Bid amounts and Excess Bids. From the tests of
Base Model, when we consider Bid amount as the outcome
variable of coal block auctions, it is observed that both Value
and Competitive Intensity have statistically significant
effect. This is aligned with economic literature that value
of coal blocks on offer along with degree of competition
for them influence the outcome in terms of amounts bid to
acquire their mineral rights. We fail to reject hypotheses 1
Table 6. Results of tests for Mediator Model
Dependent Variable →
Bid Amount Excess Bid
Estimate p-value Estimate p-value
Direct Effect 916.46 0.000‡ 49.24 0.851
Indirect Effect 29.96 0.611 27.75 0.511
Total Effect 946.42 0.001‡ 76.99 0.788
Number of observation =127
*p 0.10, † p 0.05, ‡ p 0.01.