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Collusion in private value ascending price auctions

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  • Sherstyuk, Katerina

Abstract

We investigate bidder collusion in one-sided ascending price auctions without communication. If bidding rules in an English-type auction allow bidders to match each others' bids, collusion can be sustained as a Nash equilibrium of a one-shot auction game. Our earlier experiments show that in common value auctions with complete information, collusion does occur and is sustainable even when bidders cannot explicitly coordinate their strategies. In this study, we investigate the robustness of bidders' collusive behaviour in private values, private information environments. We find that collusion still occurs as long as the bidders' gains from collusion are high.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 48 (2002)
Issue (Month): 2 (June)
Pages: 177-195

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Handle: RePEc:eee:jeborg:v:48:y:2002:i:2:p:177-195

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References

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  1. Katerina Sherstyuk, 1999. "Collusion Without Conspiracy: An Experimental Study of One-Sided Auctions," Experimental Economics, Springer, Springer, vol. 2(1), pages 59-75, August.
  2. Robert H. Porter & J. Douglas Zona, 1992. "Detection of Bid Rigging in Procurement Auctions," NBER Working Papers 4013, National Bureau of Economic Research, Inc.
  3. Feinstein, Jonathan S & Block, Michael K & Nold, Frederick C, 1985. "Asymmetric Information and Collusive Behavior in Auction Markets," American Economic Review, American Economic Association, American Economic Association, vol. 75(3), pages 441-60, June.
  4. William S. Comanor & Mark A. Schankerman, 1976. "Identical Bids and Cartel Behavior," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 7(1), pages 281-286, Spring.
  5. Baldwin, Laura H & Marshall, Robert C & Richard, Jean-Francois, 1997. "Bidder Collusion at Forest Service Timber Sales," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 105(4), pages 657-99, August.
  6. Isaac, R. Mark & Ramey, Valerie & Williams, Arlington W., 1984. "The effects of market organization on conspiracies in restraint of trade," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 5(2), pages 191-222, June.
  7. Isaac, R. Mark & Walker, James M., 1985. "Information and conspiracy in sealed bid auctions," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 6(2), pages 139-159, June.
  8. Isaac, R. Mark & Plott, Charles R., 1981. "The opportunity for conspiracy in restraint of trade : An experimental study," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 2(1), pages 1-30, March.
  9. Hendricks, Kenneth & Porter, Robert H, 1988. "An Empirical Study of an Auction with Asymmetric Information," American Economic Review, American Economic Association, American Economic Association, vol. 78(5), pages 865-83, December.
  10. Graham, Daniel A & Marshall, Robert C, 1987. "Collusive Bidder Behavior at Single-Object Second-Price and English Auctions," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 95(6), pages 1217-39, December.
  11. Robert H. Porter & J. Douglas Zona, 1999. "Ohio School Milk Markets: An Analysis of Bidding," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 263-288, Summer.
  12. Peter Cramton & Jesse Schwartz, 2000. "Collusive Bidding: Lessons from the FCC Spectrum Auctions," Papers of Peter Cramton 00jre, University of Maryland, Department of Economics - Peter Cramton, revised 09 Mar 1999.
  13. McAfee, R. Preston & McMillan, John., 1990. "Bidding Rings," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 726, California Institute of Technology, Division of the Humanities and Social Sciences.
  14. Kwasnica, Anthony M., 2000. "The choice of cooperative strategies in sealed bid auctions," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 42(3), pages 323-346, July.
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Cited by:
  1. Anthony M. Kwasnica & Katerina Sherstyuk, 2013. "Multi-Unit Auctions," Working Papers, University of Hawaii at Manoa, Department of Economics 201301, University of Hawaii at Manoa, Department of Economics.
  2. Katerina Sherstyuk, 2002. "Some Results on Anti-Competitive Behavior in Multi-Unit Ascending Price Auctions," Working Papers, University of Hawaii at Manoa, Department of Economics 200207, University of Hawaii at Manoa, Department of Economics.
  3. Michael Beckmann, 2004. "Art Auctions and Bidding Rings: Empirical Evidence from German Auction Data," Journal of Cultural Economics, Springer, Springer, vol. 28(2), pages 125-141, May.
  4. Sascha Füllbrunn, 2007. "Collusion or Sniping in simultaneous ascending Auctions," FEMM Working Papers 07025, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  5. Hailu, Atakelty & Schilizzi, Steven, 2003. "Investigating the performance of market-based instruments for resource conservation: the contribution of agent-based modelling," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia, Australian Agricultural and Resource Economics Society 57883, Australian Agricultural and Resource Economics Society.
  6. Hu, Audrey & Offerman, Theo & Onderstal, Sander, 2011. "Fighting collusion in auctions: An experimental investigation," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 29(1), pages 84-96, January.

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