Forestry auctions with interdependent values: Evidence from timber auctions

•I exploit data from U.S. Forest Service in first-price auctions.•I measure the interdependence between bidders in U.S. Forest auctions.•Parametric and nonparametric tests provide evidence of interdependent values.•I derive the optimal first-price auction: rotation, reservation price, strategy.•Forest owner's and bidders' surplus are considerably understated under IPV and APV.

This article exploits first-price sealed-bid auctions data from the U.S. Forest Service to find through a semi-parametric estimation evidence of interdependent values in the bidding behavior in the Forestry. Under this assumption, a theoretical model is developed for forest land auctions such that management of the forest is released to the winning firm. I characterize in the first-price auctions the optimal rotation as well as the reservation price. A calibration of the model is then proposed using the estimated parameters as well as the estimation of the underlying distribution of signals.