The English auction is susceptible to tacit collusion when post-auction inter-bidder resale is allowed. We show this by constructing equilibria where, with positive probability, one bidder wins the auction without any competition and divides the spoils by optimally reselling the good to the other bidders. These equilibria interim Pareto dominate (among bidders) the standard value-bidding equilibrium, without requiring the bidders to make any commitment on bidding behavior or post-bidding spoil-division.
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Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number
bgse20_2008.
Length: 47 Date of creation: Oct 2008 Date of revision: Handle: RePEc:bon:bonedp:bgse20_2008
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Rodney J. Garratt & Thomas Tröger & Charles Z. Zheng, 2009.
"Collusion via Resale,"
Econometrica,
Econometric Society, vol. 77(4), pages 1095-1136, 07.
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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McAfee, R Preston & McMillan, John, 1992.
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Other versions:
McAfee, R. Preston & McMillan, John., 1990.
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Rod Garratt & Thomas Tröger, 2005.
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