Quality Uncertainty and Repeat Purchases in Fish Auctions: Are Price Affected?

Abstract

Abstract Auctions are widely used for agricultural and seafood products worldwide. However, buyer uncertainty regarding product quality may affect auction participation and efficiency negatively. This study examines repeat purchases (RPs) as a strategy to reduce buyer uncertainty regarding product quality and whether prices are affected. We also examine whether prices are affected by buyers’ option to prioritise among bids for several lots in the same auction period. Using hedonic price functions on data from the Norwegian pelagic auction, we find that RPs are associated with lower prices and that lots with first priority obtain higher prices than comparable random transactions.