A simple model of coalitional bidding
AbstractWe analyze a model of coalitional bidding in which coalitions form endogenously and compete with each other. Since the nature of this competition influences the way in which agents organize themselves into coalitions, our main aim is to characterize the equilibrium coalition structure and the resulting bids. We do so in a simple model in which the seller may have good reason to allow joint bidding. In particular, we study a model in which the agents are budget constrained, and are allowed to form coalitions to pool their finances before engaging in the first price auction. We show that if the budget constraint is very severe, the equilibrium coalition structure consists of two coalitions, one slightly larger than the other; interestingly, it is not the grand coalition. This equilibrium coalition structure is one which yields (approximately) the maximum expected revenue. Thus the seller can induce the optimal (revenue maximizing) degree of cooperation among budget constrained buyers simply by permitting them to collude.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Springer in its journal Economic Theory.
Volume (Year): 19 (2002)
Issue (Month): 3 ()
Note: Received: June 25, 1999; revised version: November 13, 2000
Contact details of provider:
Web page: http://link.springer.de/link/service/journals/00199/index.htm
Find related papers by JEL classification:
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Iimi, Atsushi, 2004. "(Anti-)Competitive effect of joint bidding: evidence from ODA procurement auctions," Journal of the Japanese and International Economies, Elsevier, vol. 18(3), pages 416-439, September.
- Sandro Brusco & Giuseppe Lopomo, 2005.
"Simultaneous Ascending Auctions with Complementarities and Known Budget Constraints,"
Department of Economics Working Papers
05-13, Stony Brook University, Department of Economics.
- Sandro Brusco & Giuseppe Lopomo, 2009. "Simultaneous ascending auctions with complementarities and known budget constraints," Economic Theory, Springer, vol. 38(1), pages 105-124, January.
- Hideo Konishi & Debraj Ray, 2000.
"Coalition Formation as a Dynamic Process,"
Boston College Working Papers in Economics
478, Boston College Department of Economics, revised 15 Apr 2002.
- Hideo Konishi & Thomas Quint & Jun Wako, 2000.
"On the Shapley-Scarf Economy: The Case of Multiple Types of Indivisible Goods,"
Boston College Working Papers in Economics
484, Boston College Department of Economics.
- Konishi, Hideo & Quint, Thomas & Wako, Jun, 2001. "On the Shapley-Scarf economy: the case of multiple types of indivisible goods," Journal of Mathematical Economics, Elsevier, vol. 35(1), pages 1-15, February.
- Atsushi Iimi, 2007. "Aid and competition in procurement auctions: a case of highway projects," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(7), pages 997-1015.
- Konrad, Kai A., 2010.
"Information alliances in contests with budget limits,"
Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism"
SP II 2010-21, Social Science Research Center Berlin (WZB).
- Kai Konrad, 2012. "Information alliances in contests with budget limits," Public Choice, Springer, vol. 151(3), pages 679-693, June.
- Antonio Estache & A. Iimi, 2009.
"Auctions with Endogenous Participation and Quality Thresholds: Evidence from ODA Infrastructure Procurement,"
Working Papers ECARES
2009_006, ULB -- Universite Libre de Bruxelles.
- Estache, Antonio & Iimi, Atsushi, 2009. "Auctions with endogenous participation and quality thresholds : evidence from ODA infrastructure procurement," Policy Research Working Paper Series 4853, The World Bank.
- Sumit Joshi & Poorvi Vora, 2013. "Weak and strong multimarket bidding rings," Economic Theory, Springer, vol. 53(3), pages 657-696, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F Baum).
If references are entirely missing, you can add them using this form.