Sealed Bid For Timber: Fill & Download for Free

I want to add to the great answer by David Reiley (who authored some of the most important papers relevant to this questions) in the following way:1. In lab experiments there are sometimes deviations from the RET but for reasons that are more basic than RET: basically in experiments subjects often play dominated strategies (for example, in second price auctions they often bid above their values). I view this as a deeper problem than RET because RET is about strategic interaction and playing dominated strategies is about single-person rationality.2. In the real life (i.e. in the field), there are not too many experiments, David's papers are notable exceptions. Some of David's experiments are also testing more fundamental questions than the RET. For example, comparing a sealed-bid first-price auction and a descending price auction (aka a Dutch auction) is not really testing RET but rather testing whether two mechanisms that are strategically equivalent lead to the same outcomes.3. There seem to be unfortunately very few cases of experiments with different auction formats where bidders are companies that have time to gain experience with them. I can think of a few exceptions (and would be interested in seeing answers that provide other examples):a) The US Treasury has ran experiments on selling bonds via uniform vs. discriminatory price auctions. You can see one of the reports on it here:Page on Treasuryor here: Page on FrbUnfortunately, these are not directly about RET since the theorem does not imply that these two formats should yield the same revenue in multi-unit auctions. But I am mentioning these as an example of the US government thinking seriously about auction design.b) Susan Athey, Jonathan Levin, and Enrique Seira "Comparing open and Sealed Bid Auctions: Evidence from Timber Auctions" in The Quarterly Journal of Economics (2011) 126 (1): 207-257 Comparing open and Sealed Bid Auctions: Evidence from Timber Auctions*and Information and Competition in US Forest Service Timber AuctionsSusan Athey and Jonathan Levin Journal of Political Economy, 109(2), April 2001These papers look at the different auction formats used to sell timber. My understanding is that they point out that i) bidders adjust their strategies in response to the different formats in the direction that the RET would suggest and ii) the RET takes the set of bidders as fixed, while in reality there is endogenous entry into auction and different auction formats may provide different incentives to enter an auction.4. The RET is really a benchmark result - it assumes symmetric, privately informed bidders, private values, etc. In reality, some of these assumptions are often violated (for example, symmetry as discussed in the Athey Levin, Seira 2011 paper: " sealed bid auctions attract more small bidders"). Hence, in mostreal-life auctions we would expect that the auction format actually matters to some extent. The RET is used as a guidance that i) bidders adjust strategies as auction rules change and ii) you need to think about the deviations from the assumptions of the RET to be able to say how changes in rules will affect revenues.

First of all, black walnut trees aren’t uncommon. You see them all the time in the woods and yards of the Midwest. And, although black walnut timber is pretty pricey, it’s readily available at good lumber yards.What are rare, though, are veneer grade black walnut trees. To qualify as a veneer log, a walnut must have a perfectly straight trunk with 12′-16′ of clear log from the swell of the root ball to the bottom of the first branch. It must be perfectly round all the way up the log, without indentations, limb stubs, or burls. The bark must be perfectly uniform, without any twists. And it must have no injuries or insect holes that could have let fungus into the wood. Some veneer companies will even x-ray the trunk to make sure it doesn’t contain hidden fence wire, staples, or nails.Veneer companies scour the country looking for these trees and bid ferociously against each other for the right to take them down. A top quality veneer log can go for tens of thousands of dollars. And when winner does take the tree down, they use special equipment that lays the trunk gently into a carrier. Then they seal the ends of the log and rush it to the veneer mill as soon as possible so as not to let it dry out and check.So go out and plant an orchard of black walnuts as soon as you finish reading this. At seventy years, they will mature too late to benefit you, but they could pay for your grandkids’ educations and first house.

Timber Sale Sequence of Events1.Contact consultant forester and arrange for timber evaluation. Sign a business contract with the consultant that defines the roles and obligations of both parties.2.Discuss options and make decisions on marking guidelines.3.Have consultant mark sale to meet your needs and goals in timber management.4.Consultant advertises sale to several timber buyers and solicits sealed bids.5.Bid opening is held.6.Timber sale contract is signed; usually with high bidder. You receive payment.7.Timber buyer notifies you or the consultant when cutting will begin.8.Consultant makes a few unannounced inspections of timber sale while cutting is occurring.9.Consultant inspects timber after harvest is completed.AND: TIMBER SALE DO’S AND DON’TSObtain the assistance of a professional forester. Use either your District Forester with your state’s Department of Natural Resources or a private consultant. Beware of timber buyers who refer to themselves as consultants. Check credentials and ask for references.Know what you are selling. You need to know your tree species, board foot volume and tree quality. A forester can do an inventory of your woods and measure and mark the trees to be sold. District Foresters are not allowed to appraise timber or act as a landowner’s agent. Consulting foresters can be directly involved in advertising your timber for bids.Have a written contract for the sale. Most consultants use contracts developed by an attorney in order to protect both the buyer and seller. Beware of contracts offered by timber buyers. Contracts should address the number of trees, how they are marked, purchase price, the time period of the contract, acceptable logging conditions, and damage liability.Obtain several sealed bids for your timber. Your forester will assist you or handle this step for you. Do not look at the bids ahead of time or discuss other buyer’s offers with potential bidders. Sell only to licensed and bonded timber buyers. Require payment when the contract is signed.Plan the sale to protect and enhance the forest that is left after the harvest. Work with your forester to develop a plan to guide your management activities for the next five to ten years. You may need to do timber stand improvement, tree planting, or other cultural practices.Do not sell to an unlicensed timber buyer! Unlicensed buyers have no bond.Do not sell unmarked trees. Loggers frequently tell landowners that the forester missed trees that should come out, or convince landowners to let them cut damaged trees. Once you give them the go-ahead, there is no stopping them.Do not sell on the spur of the moment. Once you make a deal you cannot back up. Beware of buyers who try to hurry you.Do not sell trees on a diameter limit. The condition, not the size of the tree should be the determining factor.Do not sell only your best trees. Selling only the best trees downgrades the genetics and long term productivity of your timber.Do not sell “cut and scale” or on “shares’. There are many ways these two methods can be used to lessen the share paid to the landowner.Do not accept cash. This method may be used to entice you into selling quickly, before you know what you are selling.Do not enter into a management agreement giving a company rights to your timber.Do not include trees damaged during the logging. This sounds logical, but once it starts, trees will probably be damaged on purpose. Your forester pays attention to potential damage problems as he tallies your trees, and has probably included trees that have the potential to be damaged by the felling of other trees.IMPORTANT CONTRACT POINTS1. Description of area and designation of 7. Liability coveragetimber sold 8. Contract assignment2. Sale price and method of payment 9. Buyers’ right of access3. 4% timber harvest fees 10. Method of arbitration4. Title guarantee 11. Effective and termination date5. Penalties for breach of contract or 12. Witnessed signature of buyer and sellerdamage to remaining timber ,crops or other property6. Protection of special areas such as springs,wetlands, stream banks and other assets